Trading The Wyckoff Way

[erierambler 10]

  DbPhoenix said:

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.

 

I thought that yesterday eliminated a lot of supply at resistance and now we would be even more oversold .

erie

[DbPhoenix 42]

Since supply won the day, I wouldn't say that a lot of it was eliminated.

 

In any case, the problem with the ES now is that it's under the trading range which was established Wednesday. The NQ is stuck between the bottom of one trading range and the top of another. The long side may be a difficult row to hoe.

[Tannism 10]

What is RO the acronym for? something oversold? Thanks.

[DbPhoenix 42]

Rollover. Futures contracts rolled over yesterday and prices are somewhat different. More in the NQ, not so much in the ES.

[Bearbull 10]

Great example of hinges and midpoint support for high probability trades on NQ

[DbPhoenix 42]

Fortunately, FW posted the first one in real time:

 

 

This isn't a box, of course, but it does illustrate a different type of range-bound compression, which is what the boxes are all about anyway.

[erierambler 10]

  Bearbull said:

Great example of hinges and midpoint support for high probability trades on NQ

 

Bearbull, what considerations would have you be sure the probability was to the downside?

erie

[Susana 10]

I don't trust hinges and triangles that much. Seen to many of them fake and fail in my time.

 

Susana

[Bearbull 10]

  erierambler said:

Bearbull, what considerations would have you be sure the probability was to the downside?

erie

 

Combination of factors:

Resistance from the left, climatic vol. first around 1960 on the 12th , then around 1980 for the 13th June.

 

One could enter at dead centre (Wyckoff term) prior to breakout, with very small stop loss or wait for a breakout with increased vol and a slight retracement (No demand in VSA jargon) on a limit entry.

[Bearbull 10]

  Susana said:

I don't trust hinges and triangles that much. Seen to many of them fake and fail in my time.

 

Susana

 

Goes with any setup, depends on the context, wyckoff employed it to great advantage, that is good enough for me.

[DbPhoenix 42]

Regarding resistance, there are several ways of looking at it. One can, for example, plot a volume distribution (the hinge is circled):

 

 

 

 

Drawing a line below the bottom of the middle distribution gives one a zone on which to focus, particularly when price opens below this zone (price also opened below this zone the previous day, leading to another profitable trade):

 

 

 

 

 

Or one can draw a box around the congestion:

 

 

 

 

 

Or one can use plain ol' S/R lines, noting the test of the previous day's high:

 

 

 

 

 

All ways of illustrating the same thing. And it doesn't require special software.

Edited February 4, 2009 by DbPhoenix

[Tannism 10]

Very clever teaching technique. Nueva percepcion.

[Upthrust86 10]

The first two are OK in hindsight, but don't seem very practical in real time.

[DbPhoenix 42]

  Upthrust86 said:

The first two are OK in hindsight, but don't seem very practical in real time.

 

It would be difficult to post Wednesday's and Thursday's action ahead of time, but this is what one would have plotted Tuesday evening, if he were to plan out all of this in advance, which is, after all, the whole point.

 

 

The support and resistance levels for tomorrow, as well as the midpoints, are now done, in the previous post (though the truly prepared will want to include Friday). Anyone who's noted them can now plan out his trades. In advance.

 

As to the first two being "OK", all four present the same information.

Edited June 16, 2008 by DbPhoenix

[Upthrust86 10]

  DbPhoenix said:

 

As to the first two being "OK", all four present the same information.

 

That was "OK in hindsight," the operative word bring hindsight.

[DbPhoenix 42]

  Upthrust86 said:

That was "OK in hindsight," the operative word being hindsight.

 

And, as I said, all four present the same information. In any case, if you're interested, here's what you should have for today, at minimum. If you don't know in advance what you're going to do at each point, then you're not prepared.

 

 

 

Edited February 4, 2009 by DbPhoenix

[DbPhoenix 42]

Price finds support at B, resistance at C.

 

Preparation, Execution, Review.

 

 

 

Edited February 4, 2009 by DbPhoenix

[erierambler 10]

1370-71 may be an anticipated level for tommorrow , resistance wise...

erie

 

[firewalker 10]

  erierambler said:

1370-71 may be an anticipated level for tommorrow , resistance wise...

erie

 

 

I was basically looking at the same yesterday, which I why I was surprised to see the NQ hit resistance but the ES stay behind. Might be worth following both next to eachother, I've often found breakouts to be far more reliable when the corresponding resistance level on a correlated market is breached simultaneously.

[erierambler 10]

  firewalker said:

I've often found breakouts to be far more reliable when the corresponding resistance level on a correlated market is breached simultaneously.

 

You incorporated a breakout strategy for yesterday? Hmm, maybe that's something I should give more thought.......

erie

[firewalker 10]

  erierambler said:

You incorporated a breakout strategy for yesterday? Hmm, maybe that's something I should give more thought.......

erie

 

I think it's always good to be aware of potential breakouts, but what I was really trying to point out was the divergence between the ES and the NQ.

 

Now, with about 45 minutes before the open, the ES has touched 1972 and reacted off it (albeit on news), moving about 5 points higher than yesterday's high. At the same time the NQ hasn't moved free of the resistance. So it looks like both markets are trading at or below resistance, which - at least for me - would help increase the odds of a successful short if resistance is rejected.

[erierambler 10]

  firewalker said:

I think it's always good to be aware of potential breakouts, but what I was really trying to point out was the divergence between the ES and the NQ.

 

Now, with about 45 minutes before the open, the ES has touched 1972 and reacted off it (albeit on news), moving about 5 points higher than yesterday's high. At the same time the NQ hasn't moved free of the resistance. So it looks like both markets are trading at or below resistance, which - at least for me - would help increase the odds of a successful short if resistance is rejected.

 

Rejection being 1366?

[firewalker 10]

  erierambler said:

Rejection being 1366?

 

No, like you said, resistance at or around 1371 (depending on how you determine your levels).

[erierambler 10]

  firewalker said:

No, like you said, resistance at or around 1371 (depending on how you determine your levels).

 

No the question was rejection being 1366? ( your definition of rejection )

[firewalker 10]

  erierambler said:

No the question was rejection being 1366? ( your definition of rejection )

 

Ehm, I'm not sure we are still talking about the same thing here :\

I don't see anything special about 1366, so I don't pay much attention to that level, hence the only rejection I would look for occurs at or near resistance.