Trading The Wyckoff Way

[Niko 10]

We are finally out of the 89-18 TR and around the 712 R area.

 

We are still in an uptrend but hitting the top of a TR from august, so must be watchful for a REV. Besides BOs usually come with RET so price could fall in smaller timeframes towards what is now S at 89-90.

 

 

In the shorter term context, we are back in the channel, but approaching the top.

 

 

If the 12 S/R level is taken out by eager buyers, next levels of R are to be found at:

 

• 22
  
• 30
  
• 38
  
• 47
  
• 58
  

 

If sellers hold R and prices make it back down then possible S areas might appear at:

 

• 04-00
  
• 90-87
  
• 82
  
• 78
  
• 72-69
  

 

As for a specific day´s plan I will post it around 8:45.

[Niko 10]

So far 12 has held buyers, and by 9:00 we already have a LH, a break below LSL and a poke at the TL from yesterday´s trend.

 

The bias is bearish, with a short below S if sellers hold the LH at the open.

 

OTOH long above 14 after a BO and a RET.

[Niko 10]

My recount for the day:

 

 

1. The market opened in a choppy environment that lasted until 9:40 and the result of this choppiness was a hinge that broke around 9:40.

 

2. The hinge reached the premarket low at 05 and there buyers came in strong taking prices to the MP of the hinge.

 

3. But buyers were not able to hold the MP and prices rapidly started falling. According to the plan posted pre market this would have been the chance for a short as this was the confirmation that sellers had managed to hold the LH after the open. But in RT I was not sure about that, as my analysis was that price was still in a TR, and should wait for price to break out of the TR. Price broke out of the TR with a minor Ret.

 

4. Sellers met S at 04, after a timid poke, they managed to break below, and then a larger Ret gave another opportunity for those who did not take the short at the BO from the TR

 

5. But the shorts joy was stopped at 00 where they met strong opposition from buyers until 10:16

 

6. Shorts finally managed to engineer a LH and then a strong down wave cut through S at 00

 

7. Sellers impetus started to diminish after 99 and by 96 it was all but exhausted after a failed strong downswing, then came a HL and finally a break above R at 00. This time the RET stopped just on the 00 level and then buyers kept pushing prices until R at 04 was reached.

 

8. 04 now provided enough R to keep buyers at bay and a V reversal occurred.

 

9. But sellers were not strong enough to break through S with resolve and buyers made a HL and then pushed prices back above 00 and all the way to R at 04

 

10. 04 did not hold buyers on their first attempt, as they rapidly turned it into S. But later prices hit the OL and sellers managed to take prices back towards S breaking the LSL.

[Niko 10]

...Besides BOs usually come with RET so price could fall in smaller timeframes towards what is now S at 89-90....

 

The quote is from yesterday´s TIF post, just to give context to today's analysis.

 

 

The market went back to S area at the top of the TR (89) and found S around 86.

 

If buyers hold the LSL at 89 and keep pushing they could find R around:

 

00

12

37

55

 

Sellers can also hold, and keep buyers at bay within a TR or they could push harder and turn this into a failed BO, breaking the LSL at 86 in which case we would be inside the TR and prices would find S around:

 

54

18

98

 

For shorter term levels I will keep posting the 10.000 contracts chart, but my analysis will be based on the 100.000 in order to get a bigger picture.

 

[Niko 10]

As for a plan, if the HL at 90 holds, buy a break above R at 04. Sell the first LH after a cross below S at 90.

[Niko 10]

Here is my analysis for the day, I have also included what would have been two trades taken using what was written as a plan in the TIF.

 

 

 

1. The market failed to break away from the downtrend channel and by the open was back within the context of the downtrend. After struggling sellers managed to take S at 96 and from then a sharp fall took prices towards the 90 S area.

 

2. Buyers stepped in but were unable to hold seller who cut through S at 90 and pushed prices without RET until 88 was reached. At 88 a small RET would have given an opportunity to execute the trade proposed in the TIF thread. (Entry Red Diamond, Stop green triangle)

 

3. Prices fell and cut through S at 86 with ease with only a small RET

 

4. Sellers finally found significant buyers at 82, this is where all 5 contracts would have been exited (1 at S, 1 at the Break of the 1st SL, 1 at the break of the LSH, 1, at the break of the 2nd SL and the last one at the break of the 2 LSH). Now this proved to be a mistake as prices then fell all the way to 78, so will have to work on that.

 

5. After finding Strong S at 78 (Did not have it as a level), prices made a HL and started climbing with conviction cutting through R at 82

 

6. 86 now provided strong R and after failing to break on a HH, sellers pushed stronger making a LH and then the LSL, I did not have re-entries defined in my plan so no trade would have been taken here.

 

7. 82 was broken and then became R on the RET, then prices fell towards the LOD where once again S was found forming a DB that PJ pointed out in the chat.

 

8. Cutting through R at 82 was harder, and a hinge formed, the prices jumped with conviction without a RET after the BO from the hinge.

 

9. As opposed to sellers who had an easy ride on the way down, buyers were finding opposition each time they arrived to an S/R level, at 86 another hinge formed. But the hinge was finally broken and prices jumped towards R at 90.

 

10. The 90-92 area provided strong R, and a TR formed between 10:08 and 10:22, prices then broke below the bottom of the TR. I guess this is another selling opportunity, and I marked the Hindsight places where the trade could have been taken and closed.

 

11. Prices fell through S at 86 and then found R at the same level on the RET.

 

12. 82 once again provided S, this time there were more buying interest at this level and it held until the end of the trading session at 11.

 

13. What had been strong R just minutes ago was crossed without difficulty signaling sellers giving up.

 

14. But after reaching the 88 level sellers defined a barrier that turned into a DT at 10:44, now prices once again fell through S at 86, and after a RET sellers pushed harder towards S at 82.

 

15. Once again buyers were ready and sellers could not advance any further, by then we were into a big hinge from 10:00 and it was almost 11, so we called it a day.

[Niko 10]

To take into consideration..

 

 

[DbPhoenix 42]

This will serve both as a Trading In Foresight post and as an illustration of hinges, the daily posted prior to the open and the 5m drawn after the open.

 

Those who have read the Hinges thread will recognize that the entry was just below 50, the RET after the exit from the hinge.

 

Expected target 20+/-.

 

 

 

 

 

 

 

 

 

Edit: Supply lines leading to another hinge.

 

 

 

 

 

 

Further edit: Price comes within two pts of expected target, then trend reverses.

 

 

 

Edited December 26, 2012 by DbPhoenix

[DbPhoenix 42]

Two more hinges this morning (another was posted in the TIF thread yesterday). The first forms after the open, and when price falls out of it, price RETs to its midpoint before resuming the move down.

 

Price then reaches the bottom of the TR, then hesitates. At this point, one can wait for a reversal signal to go long, or stay short. Price takes its time but eventually forms another hinge at this level, from which it exits to the upside.

 

Simple, straightforward.

 

 

 

[tupapa 10]

 

Price then reaches the bottom of the TR, then hesitates. At this point, one can wait for a reversal signal to go long, or stay short.

 

 

Regarding the reversal signal here, would you say this is a valid entry or is there anything that would stop you from taking this? Or is this something that has to be evaluated in real time, if so, what would stop you from taking this? (If anything)

 

Thanks for the examples and for keeping the forum alive during the festive season.

[DbPhoenix 42]

How are you defining "valid entry"?

 

Db

[tupapa 10]

By valid entry, I mean a reversal signal that wyckoff or one of his disciples would approve.

 

It looks to me like a climax followed by a successful test (HL), at a Support level, which according to section 7 of the course is an entry that wyckoff would at least consider.

 

There are 2 things here that come to my mind which might be worth considering.

 

1- There is no Prilimary Support before the climax.

 

2- There is no volatility compression during the test, Wyckoff mentions this in section 7m, in page 2:

 

"Our next buying opportunity is on December 29th when the market

completes three days of lower support but the closing prices on each of

these days are between 140 and 141, showing that the selling pressure is

losing its force, since the net result of these three days' pulling and

hauling is to leave the average almost unchanged following a considerable

reaction "

 

However, I don't know if waiting for several bars of volatility contraction was a must for him.

 

At the end of the day, we have a break of SL, a strong rejection and a HL, and all of this is taking place at support so is it a valid reversal signal or am I missing something?

 

It might be best to move this to the selling climax thread? Although in hindsight,we all know this eventually turns into a hinge.

Edited December 28, 2012 by tupapa

[DbPhoenix 42]

All correct, though the hindsight part is irrelevant. Even if the test had been only a single bounce, it's still a tradeable reversal. The hinge is just a confirming factor.

 

Incidentally, an example of the phenomenon you're referring to occurs a couple of hours later, at 12:44, just after price bounces off 2596.

 

Db

Edited December 28, 2012 by DbPhoenix

[DbPhoenix 42]

Even though interday trendlines are of little to no importance to the intraday trader, prior trading ranges can and should be. Here, for example, though one might be tempted to consider the influence of the June-July trading range to have expired, the October and December trading ranges revolved around the top of that earlier trading range like pigs on a spit. Given also that price could not hold above the 50% retracement of the last downmove (the green level) despite multiple attempts suggests further downside, and given that that June-July trading range appears still to be exerting an influence on present price movement (not unlike a moon), 2580 becomes a level of interest.

 

Sometimes, however, price will find support in unexpected places, as yesterday during the lunch hour. Interested students should study that plunge and recovery so that they might recognize it the next time it occurs (see yesterday's post in the Hinges thread).

 

 

 

[PrymeTyme 10]

some running comments on a trade * i just made and managed in EU . have fun..

*(before i took it and while i was in it)

 

(it may be messy but hey it was while it happened on M1 so bare with me )

 

 

key level : 1.32099

 

after a series of higher highs/Lows.. strong rallie bars. and a shakeout we traded with strrnght in the background torwards this key level(1.32099) , where a demand bar formed right at/ torwrads the key level

 

therefore shorts dont come into play.. ,, we will wait and see if we breach it clearly and wait for a retest where we look for a long entry.. ,,..

 

we allready breached it on good volume and good looking upbars..

 

a retest is anticipated.. , we trade torwards a MP of small box within the range.. also on high vol. and strong rallie bar ,, ie. demand. and strenght has been confirmed, .

 

a retest of 1.32099 will be used as an long entry where the SL is placed at the low of a 2bar (1min ) hinge.. #@1.32056

 

the FTA is the MP @1.32195 , after succesfull breach we pull SL to BE+

next after that is the low of a mini demandchannel 1.32240 and its MP 1.32275 just shy our target

Backup is 1.32099 (entry) level

 

target 1.32305 the MP of the big box(range)

 

the actual reaction is also on dimnishing vol. and small sized downbars.. .. ie selling

pressure is not a problem.. atm

 

the approch torwards our entry level.. confirms.. our view.. of weak reaction no selling

pressure .. against demand.. and strenght

 

entered on a break of a pinbar.. .. SL is set,..

 

we trade torwards the lows of the PB .. where our Backup is .. the vol is still decreasing..

 

 

i have the feeling that the sl is in danger .. as its really tight

 

and we allready breachd the lows of the PB...

 

small hinge fromed (1min) ... may get shaken out..

 

still no demand coming in....

 

fucking close call!!!

 

 

nice but small rallie bar... now the level of 1.32099 has to bee taken out..

 

1.32099 has to hold.. or else we form a lower high... and my Sl will get in danger again-

 

there u go lower high,,, and price is on its way to my SL again..... .. ummm

 

might see a small springboard. if we make a higher low.. thou... lets see...

 

still no real signs of weakness thou... just bad timing,, but ok.. entry was justified..

 

if i get shaken out i may get a nother chance....

 

yep looks like a small hinge (springboard ) forms... at the key level of 1.32099

 

 

 

wich ever way it may breakout it will happen on good momentum...

 

odds are in favour to the upside thou.. (backround)

 

there u go..

 

breakout to the top

 

but not that hard and good.. but still thou...

 

we are above 1.32099 ..

 

current action at my entry looks like asborbtion... `***

 

still sellers arround...

 

now we have some activity.. and the result isnt in favour of my entry

 

sellers where able to keep price below,,,

 

and we are trading back to the key level 1.32099

 

wich holds for now.....

 

may act as springboard ?

 

cmon runs does stops above the smal UT..!!!

 

45mins.. till data release (pending home sales)

 

activity comin in.... highest vol.. since mins..

 

result .. narrow range... downbar..

 

not bearish thou.. as we are holding gains...!

 

 

actually we made a series of higher lows.. thus far...

 

looking like a springboard action...

 

 

still all actions that took place are in favour of my position thou..

 

even taking the heat..

 

puke bears , puke

 

all right price grinds its way up to the recent high.. wheeras if we take it out i will pull SL to

BE

 

there ya go .. break thru FTA .. and recent high.. pull SL to BE+

 

 

TP is @ 1.32305

 

Jobs done

 

 

 

Edited August 18, 2015 by DbPhoenix

[tupapa 10]

I want to share a few thoughts regarding entries on a rejection of S/R. I've been looking at these in real time, and through backtesting and forward testing but I still have nothing in terms of specific entry trigger or setup, whatever you want to call it.

 

I understand Auction Market Theory, thanks to Dbs extensive posts, so I know Where to look for a reversal. I also comprehend and I am capable of perceiving the dynamics of a climax or rejection as explained by Wyckoff in section 7m but I am still struggling to define exactly what it is that makes me go to market (or place a limit order).

 

In my case, this leads to a lack of consistency and confidence when I am trading live.

 

Yesterday Db posted a chart of a reversal pattern, in the NQ, that lead to a Hinge and a profitable trade of support. Of course, in real time, you don't know if a rejection will turn into a Hinge and I thought it would be interesting to look at different entry options during the rejection.

 

This is the 1m chart, as price rejects S for the first time:

 

 

tThe 1m chart gives us some information, and I have spent hours testing and studying 1 minute charts, however, I find this level of detail to be insufficient, to define a specific entry trigger. Hence, I am now looking at a 5sec. chart, looking for a trigger that will allow me to take the trade with total confidence and consistency. It must be a pattern that repeats itself often, and it should also be as simple as possible, there isn't time for much thinking when you trade live.

 

I know how much Db insists on the importance of the backtesting and forward testing phase, but in order to do this, you need something very specific to test. In my case, I don't think it is enough to test a break of a SL+a HL at support, using a 1minute chart. I don't think this is specific enough and venturing to a smaller bar interval might allow me to define the entry more clearly.

 

So using a 5 sec chart, lets say I want to see the rejection and a successful test. I define a test to be successful when the "Test Trend" reverses, this is, makes a HL. Attached are 2 charts to illustrate this entries, the first leads to a loss and the second to a profit.

 

I am sharing this to put my thoughts in order and since this is the Entries thread, it might lead to a fruitful discussion on reversal setups.

 

If like me, you are day-trading, presumably you are using a small bar interval that allows for a tight stop, so maybe we can discuss some entry triggers.

[DbPhoenix 42]

Question regarding your 1m chart:

 

If you were to enter at the point designated by your green dot, you would I hope exit as soon as it becomes clear that buyers have fumbled the ball and price resumes its downward track.

 

What then?

 

Db

[tupapa 10]

Yes, the green dot on the 1m chart is a HL on the 5sec chart so in my opinion it is a legit entry. But as you point out, I would exit at the break of the Dl, shown by the blue dot.

 

 

This is another reason why I think it is essential to test this using a small bar interval such as the 5sec or the tick chart.

Edited December 28, 2012 by tupapa

[DbPhoenix 42]

Why not re-enter the short at your first LH, at 15:26? There is no previously-determined support level here.

 

Db

[tupapa 10]

I am focusing on a reversal setup for the time being. Once I've defined this and tested it thoroughly, I will look into other setups.

 

Following the procedure you outline in the trading journal/trading log thread, which makes a lot of sense to me.

[DbPhoenix 42]

What clues are you using to determine that a reversal setup is even in the cards?

 

Db

[tupapa 10]

Price is at support and there is a breach of a sl, by an upwave which is much longer than any of the previos upwaves. This tells me buyers have rejected support and if sellers fail to make a new low during the test, a reversal is likely.

 

Whats ur view on this?? What do u think of both entries on the 5sec chart??

Edited December 28, 2012 by tupapa

[DbPhoenix 42]

If you're referring to the initial bounce off 09, how do you know it's support without hindsight? (I'm not ignoring your ?s about entries, but your objective here is definition; the conditions for the entry precede the entry.)

 

Db

[tupapa 10]

I know it is support from the 30m chart, the red line represents this, and it is known in foresight...

[DbPhoenix 42]

Where have you posted this chart?

 

Db