Trading The Wyckoff Way

[DbPhoenix 42]

With regard to support and resistance, do you base this entirely on the price movement or do you also consider volume levels? Do you normally see high levels of volume at support and resistance levels or a lack of volume.

 

High levels of volume would indicate to me that there was a lot of trading in these areas which could incidcate strong support or strong resistance at those price levels.

 

Low levels of volume would indicate a lack of buying demand which would lead to strong resistance and lack of supply which could indicate strong support.

 

If I am sounding confused I suppose thats because I am. Even though I have read a couple of Wyckoff books the penny still hasn't quite dropped yet.

 

I have attached 2 charts each showing the above.

 

I think that chart 1 is the right approach, or am I getting this totaly wrong?

 

Cheers

Lee

 

I'll refer you again to the first post of this thread, which includes a link to the explanation of AMT, and to the Trend thread. You will also be interested in the Volume thread. If your questions aren't answered there, or if you have any further questions, please ask them there as the focus of this thread is posting plans for the coming trading day. All the charts that have been posted in response to these questions should be helpful.

[NAVEEVIa 10]

Db

I understand that midpoint of ranges represent equilibruim & lot of trades & hence potential S/R. What i have difficulty & many traders have is buying at R or selling at S.

e.g the current wave is buying wave & price reaches R & forms a congestion area & the i see a long upbar bar on the upside , we maybe looking at possible exhaustion above us but does Wyckoff recommends buying at R or selling at S if all evidence if buying/selling pressure is manifest there as per price action.

Say NQ reaches 20 & forms a range with rejection at upper part of range & then a long downbar towards ,a sell would be consistent with W or not.

[DbPhoenix 42]

Db

I understand that midpoint of ranges represent equilibruim & lot of trades & hence potential S/R. What i have difficulty & many traders have is buying at R or selling at S.

e.g the current wave is buying wave & price reaches R & forms a congestion area & the i see a long upbar bar on the upside , we maybe looking at possible exhaustion above us but does Wyckoff recommends buying at R or selling at S if all evidence if buying/selling pressure is manifest there as per price action.

Say NQ reaches 20 & forms a range with rejection at upper part of range & then a long downbar towards ,a sell would be consistent with W or not.

 

does Wyckoff recommends buying at R or selling at S if all evidence if buying/selling pressure is manifest there as per price action.

 

No.

 

Say NQ reaches 20 & forms a range with rejection at upper part of range & then a long downbar towards ,a sell would be consistent with W or not.

 

If 20 is R, yes, though the bar is irrelevant.

 

None of which is particularly helpful to you. Or I'd be surprised if it were.

 

Two+ years ago, you were interested in Market Statistics. Then you became involved in VSA. Soon after that, you became interested in Wyckoff and opened a log. But you haven't posted for a year.

 

So what you're posting and asking is only the most superficial level of what you're really asking, and I have no way of providing you with anything that's going to do you any good until I know what's going on in your head. If, for example, you're trying to reconcile and consolidate all that you've read regarding Market Statistics, VSA, and Wyckoff, you're in for a lot of work. If, on the other hand, you're throwing everything out, more or less, and starting over from scratch with Wyckoff, that's something else, though even there you may have a few things to unlearn.

 

If you're truly in the weeds, I suggest you reopen your log, and I will comment on what you're doing if you like. If you feel that you're past that, you're welcome to use the Foresight thread to post your plans for the coming day. Since there are at least a couple of people doing the same thing, you can help each other at a time when the helping might actually do some good (as opposed, that is, to going over it in hindsight, after the opportunities are gone). If I have anything to add, I will. Then, after your trading day is over, review your trades in the CWS thread.

 

Let me know what you want to do.

[NAVEEVIa 10]

Db,

I am starting fresh with wyckoff & have have forgotten all about VSA , market statistics etc. The simplicity of Ws approach appeals to me.

I remember in your post 3 here

http://www.traderslaboratory.com/forums/f131/dbs-cajas-famosas-3882.html

 

You did say to take a long entry if R is broken ( The context of the chart in that post i am ignoring so forgive me for that)

I understand that breakouts do take place at extreme & a successful one has little drawdown.

Edited October 27, 2009 by NAVEEVIa
Again asking same question

[DbPhoenix 42]

Db,

I am starting fresh with wyckoff & have have forgotten all about VSA , market statistics etc. The simplicity of Ws approach appeals to me.

I remember in your post 3 here

http://www.traderslaboratory.com/forums/f131/dbs-cajas-famosas-3882.html

 

You did say to take a long entry if R is broken ( The context of the chart in that post i am ignoring so forgive me for that)

I understand that breakouts do take place at extreme & a successful one has little drawdown.

 

What I said was "I'll look to go long if price breaks through." But that doesn't necessarily mean buy the breakout. W didn't like breakouts. If one is going to wait for a breakout, it's better to wait for a retracement or buy any springboard that occurs after the breakout. This minimizes the risk of having one's panties twisted.

[NAVEEVIa 10]

Db,

I am also interested in knowing whether these price boxes, their edges & mid points as potential S/R is something you have integrated in Ws methodology or did W talk about it in his course.

[DbPhoenix 42]

Db,

I am also interested in knowing whether these price boxes, their edges & mid points as potential S/R is something you have integrated in Ws methodology or did W talk about it in his course.

 

"Box" is just another term for trading range, and since Wyckoff developed the concept of trading ranges, support and resistance, and equilibrium, they are central to his approach.

[firewalker 10]

My areas of interest for tomorrow (same ones as mentioned in chat today):

 

R 1741-1743 (although it remains to be seen if we revisit that level)

R 1725-1727 (notice the nice 'test from the other side' late in the day)

S 1707-1710 (next support level)

 

Like I mentioned in chat, the first spike down stopped at the midpoint of what I perceived to be the next range defined by 1707 and 1727... but others might see things different and I guess that's what makes up a market.

 

Below that, there's potential S around 1688-1690 but you'll have to go back to September to find good reference points, below that there's 1660.

 

Attached: chart of how I see things... to those who are familiar with my "style", they'll know that I'm not that sharp with pinpointing S/R to the tick, so all my "levels of interest" are usually zones from about 2 points wide (with the exception of 1772-1776).

 

 

Different scenarios for tomorrow then:

- short in the area 1725-1727 if we see a rejection there

- long from 1727 if price gets back in the previous range, with first target the midpoint at 1735

- long from 1707-1710 support area

 

I'm not restricting myself to trades from these levels alone, as illustrated last week by a "hinge" setup which occurred basically "in the middle", and by the short setups yesterday (see CWS thread).

 

I'm also keeping the dailies in the back of my head... where you can see that each move up is not getting as far in comparison to the previous one.

 

[ziebarf 10]

And for the ES tomorrow.. Longs off of 57 and shorts off of 69. Failing that, longs off of 50 and shorts off of 76.

[wjrusnak 10]

We never have the same levels, firewalker. Anyway I do have the 07-10. I made the mistake of not properly preparing for the lower levels yesterday, so today I'll do a little better job.

 

[DbPhoenix 42]

This was updated and posted yesterday, but, given where we are, it bears updating and posting again.

 

 

 

 

And this probably isn't going to be much different from what everybody else is watching, but, again, given where we are, it may be worth posting.

 

 

 

 

And this is a good example from today of what I've mentioned regarding finding unanticipated R in real time. It was not unusual for price to find equilibrium at the midpoint of the opening range at 0950 or so, but for price to turn on a dime an hour later at that exact level may have come as a surprise to those anticipating a test of 50 or 52.

 

 

[Gringo 10]

Here's daily Q's. Long term trend is still intact as TL is still holding. Volume was higher this time above the 43.2 level and supply won most of the times. This showed supply had some intent and fighting at that level. Nonetheless, volume isn't significantly high as compared to previous rejections.

 

TL is still holding and unless that breaks long term trend stays upwards in my eyes. Break of TL may imply a possibility of change in trend but not a certainty of it. Sideways, downwards or upwards moves are still all game even after the break of TL.

 

The upmoves are getting progressively shorter length wise and percent wise.

 

[NAVEEVIa 10]

I will be watching these levels on NQ.

Can i post for other instruments like TY

[DbPhoenix 42]

Can i post for other instruments like TY

 

Why not? The principles are the same, though the volatility on some instruments will kill you.

[DbPhoenix 42]

Below that, there's potential S around 1688-1690 but you'll have to go back to September to find good reference points, below that there's 1660.

 

 

[firewalker 10]

Below that, there's potential S around 1688-1690 but you'll have to go back to September to find good reference points, ...

 

What happened though? I didn't have any news scheduled and other markets don't show a spike down... but at least it confirms that buyers had buy orders there.

[Tannism 10]

I like your chart and comments.

 

Here is my weekly.

The volume was much heavier on the left side of the chart. For the potential supply, the volume has been pretty minimal here IMO. For me, a high risk entry here.

 

TannisM

[firewalker 10]

Different scenarios for tomorrow then:

- short in the area 1725-1727 if we see a rejection there

- long from 1727 if price gets back in the previous range, with first target the midpoint at 1735

- long from 1707-1710 support area

 

Given where we opened, price reacted in the support zone 1707-1710 and a long was triggered.

Now we wait and see if price can get to 1727...

[DbPhoenix 42]

What happened though? I didn't have any news scheduled and other markets don't show a spike down... but at least it confirms that buyers had buy orders there.

 

Doesn't matter. Note also that price subsequently found S at 1708 after the open, which I marked with a dashed blue line on my chart. You and wj have it as well.

 

It all works.

[DbPhoenix 42]

Given where we opened, price reacted in the support zone 1707-1710 and a long was triggered.

Now we wait and see if price can get to 1727...

 

Sorry for the redundancy. Didn't see your followup post.

[firewalker 10]

Doesn't matter. Note also that price subsequently found S at 1708 after the open, which I marked with a dashed blue line on my chart. You and wj have it as well.

 

It all works.

 

It sure does... and we halted at 1717.75, which is pretty much the midpoint of 1707-1708 and 1727...

[DbPhoenix 42]

It sure does... and we halted at 1717.75, which is pretty much the midpoint of 1707-1708 and 1727...

 

And also the bottom of the trendline.

[Gringo 10]

The volume was much heavier on the left side of the chart. For the potential supply, the volume has been pretty minimal here IMO. For me, a high risk entry here.

 

TannisM

 

Hi Tannism,

 

Having volume that far back doesn't really tell the story of demand and supply being played currently. It does tell about relative intensity of the fight being lower this time around as compared to earlier movements.

 

So this may mean demand is giving in easily to smaller supply and isn't really fighting hard to stop the drop.

 

i) Are buyers waiting for some lower price level at a bargin price to exert their pressure,

ii)or are they just weakened with no strength to stop price drop even with only a little supply?

 

We don't know and for trading purposes it doesn't even matter IMHO. What matters is price got rejected and couldn't stay above 43 area.

 

Please note that I am not trading Q's End of Day but rather on intra-day basis for the time being. Once market gives some serious signal that uptrend is over I may start deploying onger term shorts at that time. DbPhoenix in previous posts cleared my misconception on larger intervals and reminded me about lack of climatic volume and lack of break in TL as reasons to avoid shorting prematurely. TL appears to have been broken today as I write and we'll see how price behaves to deduce if it's worth shorting possibly closer to top if price gets there. However, keep in mind we haven't seen volume resembling climax so far on the upmove, which puts a damper in my eyes about the importance of TL break and longer term shorts. Perhaps this is another normal correction of market which may last a few weeks to months instead of being an end of up move.

Edited October 28, 2009 by Gringo

[DbPhoenix 42]

There were a number of interesting PA features in today's chart. The supports at 1688 and 1708 have been mentioned, as were the position of the trendline and the resistance level at 1717, but nothing afterward. Trading in foresight entails locating whatever trading ranges and support and resistance levels are most likely to apply to the upcoming trading day, but foresight is also necessary during the trading day. The most obvious aspect has to do with price's behavior at S&R. But one must also be sensitive to climactic volume, lower highs and higher lows, how and where price is finding equilibrium, and hinges.

 

Here, for example, after testing 17, price dropped back to support at 08. It attempted to rally, but settled back down to 08. At the end of what might appear to most traders as drift but what was in fact a hinge, price dropped on a WTF, providing an entry just below 05 (if one were nodding off, the WTF acts as a wakeup call).

 

This is not to say that one should stay on edge throughout his trading day. But neither should he assume that just because price appears to be drifting it is in fact going nowhere, and relax to the point where he misses the opportunities that are provided. Perhaps a list of what to be on the lookout for may be helpful. In any case, staying alert will help translate :crap:into .

 

 

[wjrusnak 10]

Ranges everywhere... 1690 looks like our closest R then as S we have 1677-1678 holding today and this evening. Below that I have 1666 as midpoint of a previous range, but beyond that, it was R and S about a month ago. Maybe buyers will finally decide to step in around there. If not they will have some pressure put on them if they let it get to 1650.

 

 

After looking that chart over, I find it interesting that the levels ran in 10's 1740, 1730, 1720, 1710, 1700, 1690, 1680ish... apparently the market is liking the 10 factor.