Trading The Wyckoff Way

[DbPhoenix 42]

Other than to point out that traders sought equilibrium within these zones, no.

[DbPhoenix 42]

What do you have for the bottom of the box?

For the time being, 1950.

 

And it bounces off 1949.

[Susana 10]

DbPhoenix,

 

My only concern is that with so many horizontals, eventually one could be given an attribute.

 

Susana

[DbPhoenix 42]

There aren't "so many". There are only the support and resistance pertinent to where price opens. This morning, there were only two pertinent resistance levels: 2000 (the past month's trading range) and 2010 (the past ten days' trading range). Price opened and found resistance at 2000.

[Susana 10]

DbPhoenix,

 

Thank you for responding, I take your advice very seriously.

 

I must ask, i use Ninja as my platform, any suggestions for continuous contract analysis to apply this methodology, i cant think of any except for expensive additional fees.

 

Thank you again.

 

Susana

[DbPhoenix 42]

I use Sierra and pay 17.50/mo (14.60/mo if one buys a year). No need for anything expensive. All one has to do is draw a box. He can do that by printing out a free chart from somewhere and drawing the box with a pencil.

[DbPhoenix 42]

In the event that the origin of 2000 is unclear, I've drawn a box around the entire month. If this seems too discretionary, take the midpoint of the upmove from 1940 to 2060 (the red line). There is also the demand line, which crossed 2000 on Friday.

 

 

One must then, of course, take the trade.

[Tannism 10]

"In the event that the origin of 2000 is unclear, I've drawn a box around the entire month. "

 

Ah... another good clue. I haven't been happy with my box drawing. My boxes generally seem too constricted to fit in with my goal to be a chapter 17 trader (Neill).

[DbPhoenix 42]

Or one may be content with the usual lines. It's all support and resistance, regardless of how one chooses to illustrate it. But if one doesn't understand the nature of support and resistance, then no form of illustration is going to make much sense. This is why the software developers clean up.

 

[firewalker 10]

Or one may be content with the usual lines. It's all support and resistance, regardless of how one chooses to illustrate it. But if one doesn't understand the nature of support and resistance, then no form of illustration is going to make much sense. This is why the software developers clean up.

 

1960 proved pretty solid as support yesterday, but price didn't do much for the first two hours, except for bounce between 1960-62 and 1972-74.

 

I was wondering at what point do you call it a day? Considering all the posts I've read and all the charts I've seen that you posted, you don't seem pretty fond of ranging days...

[DbPhoenix 42]

I didn't see any particular support yesterday, and resistance wasn't tested until after lunch. However, by that time, I had already stopped trading for the day. I try to be done in 90m if at all possible. Playing a range is not so much trading as gambling, and it's just not worth my time.

 

The best trades are taken when emotions are high, and this is often within the first five minutes. After that, traders have too much time to think.

[erierambler 10]

If Wyckoff was a probability trader would he step up to the plate in this area?

 

[DbPhoenix 42]

Very sharp. And a very good question. And, yes, I do believe he might. Given the stability of the channel, he'd consider a drop below your demand line to be an "oversold condition". However, a long would be counter-trend, and he might also just wait for the test of the supply line. The profit potential after all is much less going long in a downward channel than short.

[Kiwi 16]

I wouldn't erie because I've seen too many situations where it didn't stop.

 

The exception would occur if there was a wider up channel (longer term trend), the current point rejected price to give an up bar or two and a minor test down occurred. I would buy the rejection of 13250 and be especially pleased to do so with a significant drop in volume or an extreme in volume. Depending on what I was trading I would like to see a slight break of the wider trend channel as part of that (the more people exit or go short then the better the liquidity for an up move).

[DbPhoenix 42]

I wouldn't erie because I've seen too many situations where it didn't stop.

 

 

That's why it's better to place the long ahead of whatever reversal may occur than to go long outright.

[erierambler 10]

I wouldn't erie because I've seen too many situations where it didn't stop.

 

 

Well , tommorrow has my undivided attention

 

erie

[firewalker 10]

I didn't see any particular support yesterday, and resistance wasn't tested until after lunch. However, by that time, I had already stopped trading for the day. I try to be done in 90m if at all possible. Playing a range is not so much trading as gambling, and it's just not worth my time.

 

It might have been wrong of me to label it support, what I meant to say was that 1962-63 seemed to be strong enough to hold price up...

 

The best trades are taken when emotions are high, and this is often within the first five minutes. After that, traders have too much time to think.

 

Does that mean you think price reacts differently as the day progresses, less technically and you give more meaning to what happens in the first two hours than the rest of the day?

[gassah 10]

It's probably easier to see in retrospect that the SP500 was struggling to get to the top of the range, weakly attempted to break away and then folded. It seemed like forever to come back down.

[firewalker 10]

It's probably easier to see in retrospect that the SP500 was struggling to get to the top of the range, weakly attempted to break away and then folded. It seemed like forever to come back down.

 

Does the time it took to break down mean anything to you?

Would you see it as another period of distribution perhaps?

[gassah 10]

I'm viewing the region above the range as further distribution, yes.

[DbPhoenix 42]

Does that mean you think price reacts differently as the day progresses, less technically and you give more meaning to what happens in the first two hours than the rest of the day?

 

Price behaves differently as the day goes on because there's continuing history. I don't know that it's more or less "technical". As to "meaning", I don't concern myself with that.

[DbPhoenix 42]

Well , tommorrow has my undivided attention

 

erie

 

You know how I feel about "making calls", so I'll just say "nice job". I used S at 1920 for the NQ rather than a channel (too steep), but it all comes out the same, just the way it's supposed to .

[erierambler 10]

I used S at 1920 for the NQ rather than a channel (too steep), but it all comes out the same, just the way it's supposed to .

 

I can see 1920 and some of how the NQ is different from the ES , but I still have a lot to learn....

erie

[erierambler 10]

I used S at 1920 for the NQ rather than a channel (too steep), but it all comes out the same, just the way it's supposed to .

 

There is your S at 1920 hit, so we have the same drill again today.

erie

[DbPhoenix 42]

There is your S at 1920 hit, so we have the same drill again today.

erie

 

Only now all the numbers are different due to the RO. In any case, that initial long trade yesterday was quick, easy, and profitable. But then we hit resistance and the long side was done. If one was able to find a good short entry and hold onto it, he did even better. However, short entries were not nearly as clean.

 

This goes back to what I was saying -- or trying to -- about going long in a downtrend even though the market may be "oversold". There's much more to push against in this situation, so using the opposite side of whatever channel there may be is over-optimistic. This is not to say that there won't be profitable long trades, as was the case yesterday. But one must be especially attentive to signs that there's just too much supply for demand to absorb and break through.