Trading The Wyckoff Way

[DbPhoenix 42]

A couple of reminders:

 

 

 

 

[Gringo 10]

It appears we are at an important juncture. Q's have gone higher than s/r in after hours after turning back to s/r recently.

 

What I know is that price is above s/r. My EOD short of Q tonight went in the red as soon as AAPL announced its earnings. Earlier I had mentioned 200 being a very important level for AAPL. Lets see if it can hold this level or is it going to fumble here. Markets are full of excitement whether it's day or it's night.

 

I had shorted Q's based on low volume test of s/r on dailies and initiated position close to end of day. Atleast with s/r it's not too long before one finds out whether the decision was right or wrong. There were two converging thoughts. First, that demand came in very quickly after price came down after hitting s/r and instead of continuing lower turned back up. Second, was the low volume test favouring short. At S/r without a break upwards I went for short.

 

 

 

As a bonus here is the financial index as well. It's right under s/r so far but may break upwards in the morning with techs pushing higher.

 

[DbPhoenix 42]

It appears we are at an important juncture. Q's have gone higher than s/r in after hours after turning back to s/r recently.

 

What I know is that price is above s/r. My EOD short of Q tonight went in the red as soon as AAPL announced its earnings.

 

I had shorted Q's based on low volume test of s/r on dailies and initiated position close to end of day. Atleast with s/r it's not too long before one finds out whether the decision was right or wrong. There were two converging thoughts. First, that demand came in very quickly after price came down after hitting s/r and instead of continuing lower turned back up. Second, was the low volume test favouring short. At S/r without a break upwards I went for short.

 

I'm puzzled by some of your remarks. If your short was EOD, how would it even have been triggered unless you just jumped in at the MOC price? And if you did that, why did you do that? Also, what do you mean by "low volume test of s/r"? Do you mean a low volume test of support and a low volume test or resistance? Whether either or both, why would the volume level prompt you to enter a trade?

[Gringo 10]

I'm puzzled by some of your remarks. If your short was EOD, how would it even have been triggered unless you just jumped in at the MOC price? And if you did that, why did you do that? Also, what do you mean by "low volume test of s/r"? Do you mean a low volume test of support and a low volume test or resistance? Whether either or both, why would the volume level prompt you to enter a trade?

 

By EOD mean close to market close. Position was initiated a few minutes before close.

 

The comment about why I took a short with lower volume is now causing me to see it as somewhat of a mistake. Mistake in the sense that I didn't wait for price to get rejected but preempted the reversal when price hit R. I considered the fact that R was not broken to mean we were under it and hence a reversal was higher probability due to price being at s/r and volume when price reached R to be lower than previous times it had reached R.

 

I thought that's what Wyckoff meant by test on lower volume.

 

[DbPhoenix 42]

By EOD mean close to market close. Position was initiated a few minutes before close.

 

And why would you do that? Your tactics are yours, but placing a short under the day's low or a long above the day's high will avoid a lot of bad trades. If you're going to try to pre-empt the price action, you may as well trade intraday off hourly bars. Which a lot of people wind up doing. And then they're back where they started.

 

The comment about why I took a short with lower volume is now causing me to see it as somewhat of a mistake. Mistake in the sense that I didn't wait for price to get rejected but preempted the reversal when price hit R.

 

Why are you calling it resistance? It appears to be no more than a swing high. The last swing high didn't provide resistance, nor did the one before that, tho it did slow price down a little. Even if you weren't trading the channel, you are still in an undeniable uptrend. Until that uptrend is changed, I see no reason to short.

 

I considered the fact that R was not broken to mean we were under it and hence a reversal was higher probability due to price being at s/r and volume when price reached R to be lower than previous times it had reached R.

 

I thought that's what Wyckoff meant by test on lower volume.

 

Price was not at s/r; price was at r, i.e, resistance. Price left the support station on the 2nd.

 

As to the volume being lower, I still don't understand why that's important to you, much less why it would prompt a short. Low volume means nothing more than low participation. That in and of itself is no criterion for entering a trade. If anything, it's a criterion for doing nothing. The relative strength of buyers and sellers is determined by price action, not the level of volume. Since you are only partly through the swing from one side of the channel to the other, there's no reason to assume that price is going to halt at the last swing high and reverse the trend.

 

As to the test, there was no buying climax, so nothing to test. All you're "testing" is whatever resistance is provided by the last swing high (or any swing high) which, as it turned out, wasn't much.

 

Don't try to outguess the market. Just follow the yellow brick road.

 

 

[wjrusnak 10]

Thank you for posting that long term outlook DBPhoenix. Anyway, Apple surprised the market and sent the NQ soaring after hours. This leaves us with uncertainty above, but we still have our S below. I plan to approach tomorrow with a real-time sense of S/R. This may be a day where shorting GLOBEX highs or buying GLOBEX lows may be the only option to catch a move. Of course in these cases, one has to pay extra attention to the price action.

 

I was corrected about my up channel (thanks again DBPhoenix). Furthermore, it looks like it was broken again... but this time to the upside.

 

PS. I was stopped out of a long (~32) around 31 today. Ouch.

 

[DbPhoenix 42]

 

PS. I was stopped out of a long (~32) around 31 today. Ouch.

 

Bummer. It's worth noting, though, given the pre-planning that was posted, that price found R at 40, to the tick, then S within two ticks of 30. So the strategy remains sound.

 

As for the move "after hours", this is what we'd call "overbought". One has to be careful about bias, and you may recall that I've expected a test of this level, but the channel may be beaten by this longer-term R. If it isn't, then we can look forward to further upside within the channel.

[Gringo 10]

And why would you do that? Your tactics are yours, but placing a short under the day's low or a long above the day's high will avoid a lot of bad trades. If you're going to try to pre-empt the price action, you may as well trade intraday off hourly bars. Which a lot of people wind up doing. And then they're back where they started.

 

Yes this is my mistake. Oweing to earning coming out I had worried I would be left behind and jumped the gun.

 

 

Why are you calling it resistance? It appears to be no more than a swing high. The last swing high didn't provide resistance, nor did the one before that, tho it did slow price down a little. Even if you weren't trading the channel, you are still in an undeniable uptrend. Until that uptrend is changed, I see no reason to short.

 

Price was not at s/r; price was at r, i.e, resistance. Price left the support station on the 2nd.

 

Now, this is confusing me. It looks like a pretty reasonable box and shorting top of it which I am considering to be s/r is only a swing high in your eyes! Because this is the highest point for market doesn't it make it more than a swing high? My idea was not that it's the start of bear move but only that price might end up being at lower end of box.

 

As to the test, there was no buying climax, so nothing to test. All you're "testing" is whatever resistance is provided by the last swing high (or any swing high) which, as it turned out, wasn't much.

 

Perhaps that's what's differentiating a proper s/r from just a swing high. I was considering volume only at s/r which in turn made whatever the volume on first turn the climax volume in my eyes.

 

 

Don't try to outguess the market. Just follow the yellow brick road.

 

Sounds simple enough, doesn't it?

[DbPhoenix 42]

Now, this is confusing me. It looks like a pretty reasonable box and shorting top of it which I am considering to be s/r is only a swing high in your eyes! Because this is the highest point for market doesn't it make it more than a swing high? My idea was not that it's the start of bear move but only that price might end up being at lower end of box.

 

The upper limit of whatever you're looking at is resistance. The lower limit is support.

 

As for the box, or range, you can trade that if you like and ignore the channel, but, if you do, what's the point in drawing the channel? And shorting resistance without any confirmation of weakness -- such as rejection of the upper limit -- just isn't wise.

 

Perhaps that's what's differentiating a proper s/r from just a swing high. I was considering volume only at s/r which in turn made whatever the volume on first turn the climax volume in my eyes.

How is the volume any more climactic than at any other swing point, such as the beginning of September? In any case, the high volume occurs on the downside, not the upside. And, in any case, if you were going to short what you saw as a test of resistance on weak volume, you would have shorted yesterday. That buyers were able not only to halt the downward progress of price on Friday but push it back to resistance yesterday suggests strength, not weakness.

 

Again, volume reflects the degree of participation. If you want to know whether buyers or sellers have the upper hand, look at price action.

[Gringo 10]

Ok. I got out in the morning. Couldn't wait for market gods to give me more rope. Close to BE isn't bad for a blunder.:cheers:

[pinetree 10]

As I go over a lot of the Wyckoff material (pdf:s) posted on this forum as well as in books (such as “Charting the stock market”, Livermore’s writings, some of Gann (The truth of the stock tape), etc) it seems to me that “they” (Wyckoff and/or people applying Wyckoff principles) analyze each and every bar to find meaning. And they find meaning!! I’ve tried this (here) and it hasn’t worked for me so far. All it has done for me so far is getting in and out of trades where I shouldn’t just because I “think” there is a trade there based on my perception of price/volume action. I accept that this could all be about mastery, but should one really strive to find reason in each and every bar?

 

The discussions in the various threads makes more sense to me where the they seem to focus more on buying and selling waves, strength/weakness and how price behaves at support and resistance.

 

I’ve read and re-read the material several times and it makes sense when I read it, but I feel that it would be very difficult applying this in real time (EOD). As an example, below are my thoughts on the Wyckoff analysis 1930-1931. Some of it was posted here.

 

I'll do this post in 2 as there will be too much text otherwise.

 

September 21st, the average loses 4 points more, making a low of 94, but recovers 5 points by closing time and this makes it close above the previous day. The volume is 4,400,000 -- again unusually high and almost equal to the day before. This action, combined with the 8 point spread in prices for the day and the slightly higher closing leads us to cover our shorts with a view to putting them out again on a further rally; or, we may prefer to sit tight and depend on our recently reduced stops to keep our trades alive if the expected rally should fail to develop material proportions

 

This to me seems like reading a lot into a specific bar. Sure, action looks climatic, but how can they be so “certain” that they actually close out their short trade? I cannot see any support area close to the climax.

 

On the 22nd, the volume drops off to about 2,000,000 shares; the close is slightly lower and the range has narrowed. The net result of these three sessions is to leave the market practically unchanged at the third day's close. Downward progress seems to have been checked and the small volume on the dip back from the high of the 21st, on Sept. 22nd, implies a lifting of selling pressure. After such a great decline within three weeks, this is an indication of more rally.

 

Again, market is not at support (at least not what can be seen on the chart) and it seems to me that they are reading a lot into the action of each and every bar during the last three days?

 

After such a great decline within three weeks, this is an indication of more rally. This comes on the 23rd, and gives us an opportunity to sell short again while the market is still strong or when we see the rally is failing. Such an indication is given by the way it rallies on the 23rd. On this day, the average recovers to nearly 107, closing at 105½, but the volume falls off to under 3,000,000 shares and we therefore suspect that it is merely due to shorts who all tried to cover at once. Such a rally is too effervescent. It is not likely to last because it removes buying power which formerly existed, and leaves the market without support between the high point of the rally and the previous low.

 

We are not up against resistance (other than at the midpoint of the small consolidation from Sep 14-17 but arguing that this is resistance on a daily where one would be confident to open a short is pushing it to me, or am I wrong here?) and neither is volume especially low looking back further than September 18th. Spread is wide and volume seem rather high to me – i.e. buyers are aggressive enough to push price quite a bit although sellers are supplying them with stock.

 

Volume decreases to under 1,500,000 on the 26th and 28th, but in view of the market's recent bearish action this looks more like a swing to a dead center preceding new weakness, than diminishing force of supply

 

What bearish action do they mean here? Price did form some sort of climax and came back on lower volume and spread to test that climax. Sure, if you are entering longs on a breach of a day’s high to go long you wouldn’t have taken a long trade (as that breach never happens), but I don’t see how to draw a conclusion from the action that it is bearish before they know which way it breaks? Does it matter if the climax happened at support or not?

 

Instead of looking bearish, I would be leaning slightly bullish, waiting for a test of the climax, and then enter a long. However, knowing that the climax didn’t occur at a support I would be cautious. Is this a “strange” way of interpreting action here?

[pinetree 10]

Some of this can also be four here.

 

Next day, June 20th, removes all doubts as to the immediate tendency of the average, for the market opens up a point and a half above the previous night's close and on a greatly increased volume makes a rapid advance nearly to 131,putting the average into new high ground above the previous trading zone. The heavy volume emphasizes the importance of this. (See Par. 2, Footnote Pg. 16.

 

I don’t see the heavy volume on this day? Sure, it is a wide range day, but all it does it taking the average up into resistance (or just slightly above it, but since it is never a specific level one could argue that we are right at resistance) where I would be looking to short if prices turned down.

 

The 24th recovers the loss; the average advances 8 points for the day and 3½ points above the June 22nd high, or to 141, and the volume is the highest thus far, over 5,000,000 shares. We begin to grow wary of the bull side because that volume in comparison with the trading of previous weeks indicates selling by large interests. (That is, a probable buying climax.) We move our stops up within a point or so of the June 23rd low and await developments

 

Why selling by large interests? Why not buying? Why are they expecting a probable buying climax there and then? Is it based purely on the huge volume and the large spread or is there something else to it? I know there are lows from December 1930 at around 136-139. Is that it? Or is it that we are up against resistance from the range from mid April-mid May?

 

The 25th makes a further gain of 2 points in the average, then the price slumps about 6 points, closing a point from the low, on volume of 4,300,000 shares -- large supply overcoming an excited public demand coming in, as usual, on the top of the rise. This is distinctly bearish.(*) We therefore close out our long trading positions and examine our individual charts for stocks which are in a weak technical position so that we can get short on the next bulge.

 

I see how this is bearish as sellers are more eager than buyers, thus pushing price down to close slightly lower. However, how can they be so certain and thus “know” that they should close their long? This might just produce a short and shallow pullback before higher prices.

 

Note the shortening of the upthrusts, that is, the tendency of the high points to arch over, from the 24th to the 27th.

 

Does this really mean anything?

 

June 26th shows a range of about 5 points -- a little narrower. Although the closing is near the top, the volume has fallen off to about 3,100,000 shares and the up-thrusts are shortening. In the net, these indications are bearish. The outlines of a new trading zone have been tentatively established between 137 and 143.

 

They seem to analyze each and every bar to find meaning (and they do!!). I tried this (here) and it doesn’t work for me. I accept that this could all be about mastery, but should one strive to find reason in each and every bar? I’ve tried and all it did for me was getting me into trades that was their simply because I thought so based on my reading of each and every bar.

On the 27th, the average bulges over a point, narrows its range to 3½ points and closes with a net gain of about 1½ points on a volume of about 3,800,000 (Saturday's volume doubled). This looks like bidding up to a new high in order to catch shorts, and selling on the way down. We therefore put out some shorts, protecting our commitments with stops 1 3/8 to 2 or 3 points above the high of June 27th.

 

Sure, volume is lower but couldn’t that just mean that all supply had been taken by bulls from 132 up to 144 and there is no supply left up there? Price breaks resistance and close is almost on the high of the day. How can this possibly be bearish and what in this action makes them go short? I can clearly see volume diminishing on the top of the rally and that one can consider this to be lesser demand but from that to actually putting out a short…? Trend is still upwards (or is it?).

 

July 1st, there is a wider spread in the price, nearly 2 points higher closing, but volume shrinks to 1,700,000: bearish

 

It sort of makes sense, but they still read a lot into each and every bar/volume. Couldn’t one also interpret it as prices having retraced from a high point of 144 down to 136 where selling dried up and buyers managed to push prices higher – i.e. bullish? On the 30th there was a small push below the low on the 29th but no new selling came out and sellers seem to be done and price, sitting a support, should move higher?

 

On the 2nd, the market narrows to a 3 point range for the average and the closing is 1½ points lower on reduced volume -- increased dullness, lower close, and less volume indicate less power on the bull side.

 

Why less power on the bull side? Why not: lower volume as price falls. Sellers are done as no more supply is coming out – bullish?

 

On the 3rd, there is another attempt to rally and the average reaches the old 143 supply line at the upper edge of the trading zone, closing about 3 points higher but volume is not measuring up to the standard of previous (late June) rally days. Nothing to be afraid of. (We sell more stocks short on this rally which is the bulge we have been waiting for, placing stops, as before, above the danger point, that is, the high of June 27th.)

 

Once again, this is beautiful but I could never have done this. They put out a short on the exact top of the retracement. I see that volume is a lot lower than on previous rallies, but couldn’t that just be that sellers are done?

 

I tried to do this type of trade in XACT BULL (Here…) but didn’t succeed nearly as well. Is there any obvious difference screaming out to you? I guess one difference could be the buying climax they saw on Sep 24 and that this action (lower volume and spread) makes it a “legitimate” test of the high and thus a good place to enter a short?

[wjrusnak 10]

Sir, you write long posts with many questions. I can't help you tackle this bar by bar insanity, since I'm horrible at it as well. My suggestion to you is to forget bar by bar, because I feel that you were on the right track by seeing price in waves. Another way to look at it is that inside that bar was a ton of other bars upon bars and bars... and then some bars if you want. Point being: bars encapsulate activity within a time frame and spit out HIGH LOW CLOSE. Not much different than watching the highlights of a sports event. In this case you lose the activity which occurred in waves to three or four variables (OHLC).

 

You may have a lot of trouble trying to figure out the market by using a bar by bar approach, so I suggest you simplify. From what I gathered from your other post is that you know what S/R is and how to find it. As for incorporating volume into that, know that it is interest. When you asked "why is this buying? can't it be selling", I feel that you were correct. Can't buy without a seller and vice versa. What you want to look at is price during those times, which then brings you to looking at the bigger scheme (the wave behind it) or intraday activity (smaller bars). Where did this higher activity occur? What happened to price after/during the higher volume surge? Chances are... the activity occurred at S/R or at the top of a channel or at the break of a trend line. Price action...

 

The bottom line is, you have to pay attention to price. Traders form channels, trends, and ranges, based upon an increasing or decreasing collaborative valuation of an underlying asset or commodity (maybe you can chart the price of women's fashions items like this as well?). You want to find those obvious patterns and you'll notice that others are seeing them as well, as evident by an increase in volume. Imagine how many people think.... "if this gets to R, I am going to put on a short". Volume will tell you how many people thought that same thing, as well as tell you how many people thought, "if this gets to R, I better buy for the break-out" (buyers and sellers).

 

Anyway, I feel you may be complicating things for yourself and that is not a good road to travel. Simplify... and good luck.

 

-- Bill

[jfw215 11]

DB,

 

Does it matter if what kind of chart you're drawing channels on? ie. range, tick, minutes, days, etc?

 

I thought the more conventional the chart the better right? ie. daily, hourly, 5m, etc

 

I'm asking bc Wj is using a 20tick range chart.

 

Thanks

 

JW

[DbPhoenix 42]

DB,

 

Does it matter if what kind of chart you're drawing channels on? ie. range, tick, minutes, days, etc?

 

I thought the more conventional the chart the better right? ie. daily, hourly, 5m, etc

 

I'm asking bc Wj is using a 20tick range chart.

 

Thanks

 

JW

 

I have several views: range, tick, time, CVB. But I only draw channels and trendlines on time charts because that's what Wyckoff did and because I attach the same importance to them. There will be differences if these lines are drawn on charts other than time charts, just as there will be differences in trendlines according to whether or not one includes the overnite. And the differences can be minor or major. But I'm not going to tell somebody they can't use a range chart if they want to be "pure". Whatever works for them. I do however try to make a point of modifying their charts rather than start over with one of my own using a different basis for the bar (or tick, or line). If I were to do the latter, we'd be talking apples and oranges.

 

I mentioned in my last post on this that Wyckoff would consider a move out of the channel to be an "overbought" position, in which case price would retreat, which it did. Whatever chart type one uses should have shown that overbought condition. If it didn't, then the trader missed out on important information. One can't understand what price is trying to tell him if he's speaking a different language.

[DbPhoenix 42]

As I go over a lot of the Wyckoff material (pdf:s) posted on this forum as well as in books (such as “Charting the stock market”, Livermore’s writings, some of Gann (The truth of the stock tape), etc) it seems to me that “they” (Wyckoff and/or people applying Wyckoff principles) analyze each and every bar to find meaning.

 

I can speak only to Wyckoff since so many of those who claim to apply "Wyckoff principles" to their work don't do anything of the kind. But Wyckoff did not "analyze each and every bar to find meaning". The bar was simply a means by which he told a story.

 

What you get out of all this depends on what you want from it. Think of it in terms of learning how to operate a car. You can buy, rent, or borrow a car from somebody and arrange for that somebody to show you how to make the car go, how to make it stop, how to make it go left and right. At some point, you may become more interested in the why and watch somebody rebuild an engine or transmission or even assemble an entire car. If you become even more interested, you may end up building a car yourself.

 

Or, if the mechanical is not appealing, look at the process in terms of fine art. You can go to a gallery and buy something. Or if you want to know more of the process, you can watch somebody create the work. Eventually, you may study and learn how to create one yourself.

 

Applying these analogies to understanding price action should not be a great leap. Think about it.

[ziebarf 10]

For those of us using ninja or other software that sucks for continuous contracts, this website http://timingcharts.com/index.php has nice clean charts that date back many years for most futures contracts

 

As far as the current state of the market, I am kind of iffy basing trades around 1754 as it has been choppy in the region. I think I am going to hold out to base trades off of 1744/1730 or potentially 73 if the price action is just right.

 

EDIT: Here is my higer timeframe chart for tomorrow (zoomed in on relevant area). The orange lines are the midpoints of the ranges. The VAP paints a different picture for this area, but this range looks the most logical to me.

Edited October 21, 2009 by ziebarf

[Head2k 10]

pinetree,

unless you use a tick chart like Db does, you always analyze "bars". But there is a difference between analyzing a bar alone and analyzing price action represented by bars. Wyckoff doesn't analyze a bar. He analyzes price flow, and the bars are used only to display this flow.

And it is not only price flow, it is also emotional flow. That's why you need to watch volume bars together with price bars. Only then you get a full picture of this flow... Again unless you watch a tick chart develop in real time.

 

As for the Wyckoff's market analysis, notice that it is a hindsight analysis and that it doesn't suggest any trade which would turn into a loser or break even. In another words, the analysis and the suggested trades are a bit idealized, IMHO. Reading from left to right and given only the daily bars without a possibility to "look inside" them, I don't understand at least half of the suggested trades either.

But since I am a beginner, this may be my fault. Or the case may be that Wyckoff considered the trades to be initiated using a more detailed chart or a tape.

 

Now to your first post and the September action:

 

My personal view is that if I didnt expect 95 to act as S even before the climactic activity, I wouldn't close the short entirely. On the other hand, a scale-out would be a good idea. The reasons behind a scale-out or even closing the short entirely are simple. The first one is that there is a significant climactic activity. The other reason is that the September decline did not form any serious horizontal areas which could provide a strong resistance in case of advance. So the exit or scale-out is a way of protection against a potential adverse move which might be as smooth as the decline.

 

As for 22nd, the day after the climax, one can say that the selling pressure was withdrawn, but bulls didn't take advantage of that

In another words, the decline obviously stopped, at least for the time being, and the pressure eased. So the sellers are having a break, but buyers are hesitant. That's why the low volume and spread, and an inside bar.

Wyckoff says it is an indication of a rally, I wouldn't be so sure as I would think that it will go with the treaders who show some initiative after this pause / indecision.

 

As for shorting the top of the technical rally, I don't get it either.

 

As for the bias after the retest of the climax area on 25th, notice that despite a supply line was broken, the last swing high still holds (that would be the top of your red box). So technically there is no strong reason to expect a higher low. And then price can't overcome the midpoint of the developing range (between the climax and the rally top).

 

The point is... Don't care about the entries or exits which Wyckoff suggests, but focus on the story. But remember that the story is idealized a bit and that you need to do your own research and testing. The principles are sound and simple, but the application is not as easy as in the given example.

 

Everything only IMHO.

[wjrusnak 10]

I have basically the same levels as Ziebarf, with exception of keeping 1753. It did seem to turn into a mid point though after the morning session. 1773 would be a level, but as of open, it proved to be just overbought territory as DB mentioned. 1760 then looks like better R with 1744 as S. Overall we still have that massive uptrend.

 

[DbPhoenix 42]

I have basically the same levels as Ziebarf, with exception of keeping 1753. It did seem to turn into a mid point though after the morning session. 1773 would be a level, but as of open, it proved to be just overbought territory as DB mentioned. 1760 then looks like better R with 1744 as S. Overall we still have that massive uptrend.

 

Yesterday was one of those not so easy to define days in which one has to allow price to create a range in the moment along with new S/R levels. Here it was first a test of 61, then 53, then 61 again, then 53 again, all hovering around a midpoint determined by previous swing highs. Not a great range, but the moves were reasonably clean until price found equilibrium at the midpoint. These are not the easiest days to trade since one has so little to go by. But they do reinforce the idea that one must be in front of the screen, watching price and volume move together, in order to develop a sense of just what it is that traders are trying to do. Without that substance, one is reduced to trading form, and that leads to many of the difficulties people have when they try to apply these principles.

[firewalker 10]

I have basically the same levels as Ziebarf, with exception of keeping 1753. It did seem to turn into a mid point though after the morning session. 1773 would be a level, but as of open, it proved to be just overbought territory as DB mentioned. 1760 then looks like better R with 1744 as S. Overall we still have that massive uptrend.

 

Overnight action doesn't exactly make things much clearer for me... I'm looking at the 53-55 zone for a potential short, and 1742-44 as potential S. But I hope we're not restricted to a 10 point range ...

[wjrusnak 10]

Do we have ourselves a range?

 

[pinetree 10]

What you get out of all this depends on what you want from it. Think of it in terms of learning how to operate a car. You can buy, rent, or borrow a car from somebody and arrange for that somebody to show you how to make the car go, how to make it stop, how to make it go left and right. At some point, you may become more interested in the why and watch somebody rebuild an engine or transmission or even assemble an entire car. If you become even more interested, you may end up building a car yourself.

 

Or, if the mechanical is not appealing, look at the process in terms of fine art. You can go to a gallery and buy something. Or if you want to know more of the process, you can watch somebody create the work. Eventually, you may study and learn how to create one yourself.

 

Applying these analogies to understanding price action should not be a great leap. Think about it.

 

I would say I am in the "building the car" stage. To me, this stage forces me to question some of all the material (and with material I also include looking at tons of charts, EOD as that is what I trade) I go over in order to develop a deeper understanding. Sometimes what I read makes complete sense, but other times it makes no sense. I don't want to take a short cut with someone telling me to put on a trade here or here, but I am still (and will probably always be since your never reach complete mastery...) at a stage where I need some 3rd party input to develop a deeper understanding. What is interesting is getting the input that I get from the participants in this forum.

[pinetree 10]

As for the bias after the retest of the climax area on 25th, notice that despite a supply line was broken, the last swing high still holds (that would be the top of your red box). So technically there is no strong reason to expect a higher low. And then price can't overcome the midpoint of the developing range (between the climax and the rally top).

 

Thanks for your ideas and opinions. It helps!

 

As for the climax and possible retest, does the technical rally "have to" breach the previous swing high? I know it doesn't have to but was that something that Wyckoff was looking for?

 

Looking at the chart again I do see that volume on Sep 24 and 25 is lower than the climax day but still quite a lot higher than any day in August and September up until the climax. I guess one could say that the struggle between buyers/sellers is still going on and that sellers were not enough washed out during the climax. They still seem to have stock to supply which can halt a rise in price - thus action is at least not as bullish as in the "typical" high volume climax and low volume retest.

[Gringo 10]

As apparent from the yellow horizontal volume on NQ the bulk of trades are around 1744 - 1755 area. Doesn't this make this area a mid with 1774 more or less as upper extreme? It could be the limited bar frame not going far back enough that's giving this illusion. At times having price going back more gives a better picture.

 

I have given below a 60 min chart of Q's in order to compress more price data. It's not too clear either but may give another perspective.