Reading Charts in Real Time

[forrestang 10]

Thanks for the insight into the S/R levels fellas.

 

As of right now, NQ price is hovering right at 1534. So the level you see on my chart is tentative as this may change.

 

It looks like the 1520 level is more important than ever. Leading up to Friday's session, it was only a swing point, but by the end of the cash session, it seems to have shown it's relevance.

 

This 1520 was tested on Thursday. During Friday, it was tested twice before being broken, then 'flipped' and becoming support.

 

We've made a push up to 1536 during the overnight as of right now. The only thing above it is a potential level at 1550. 1536 might become a good potential target for a long trade if price sets up that way.

 

PLAN FOR TOMMORROW:

 

The 1520 Level is key. If price drops to 1520, and price action dictates, a potential long from 1520 with targets to 1536 and 1550 might be in order.

 

The area between 1510 - 1520 is somewhat noisy. Seems as if a lot of activity is represented in this area? So I am thinking 1520 is a strong area of support. If price decides to spend time in this area, I probably won't touch it? Is this read of this zone reasonable, or am I missing something?

 

If price goes below the 1510 area, and price action dictates, a short from that area towards 1500 AND 1492 seems reasonable (1500 is there it's just not on my charts).

 

The above comments ARE NOT predictions, only observations of what my thinking will be should price reach certain areas and HOW it reacts in those areas.

 

Edited July 20, 2009 by forrestang

[Dinerotrader 10]

Looking to sell at breakout below support zone.

 

 

Update 1: Support barely broken. I noted my entry, stop, and profit targets.

 

 

Update 2: My Support level appears to have been a little too high as support is being found just below my choosen breakout level. Moved my stop down since my entry appears flawed..... As I was writing this I got stopped out.

 

Edited July 20, 2009 by Dinerotrader

[Dinerotrader 10]

EUR/JPY. Entered long now at 134.06. Annotating real time is not my forte yet.

 

[thalestrader 14]

Looking to sell at breakout below support zone ...

Update 1: Support barely broken. I noted my entry, stop, and profit targets ... My Support level appears to have been a little too high as support is being found just below my choosen breakout level. Moved my stop down since my entry appears flawed..... As I was writing this I got stopped out.

 

Hi imorgan,

 

I have a couple of questions:

 

1) Where was your initial stop loss?

 

2) What makes you think your support level "appears to have been too high"? Are you meaning that the spread took you in before a break of support? Or do you mean that you don't feel that you correctly identified a support level?

 

Thank you for sharing your work with us!

 

Best Wishes,

 

Thales

[thalestrader 14]

EUR/JPY. Entered long now at 134.06.

 

Hi imorgan,

 

What made you decide to choose to take a long position there?

 

Best Wishes,

 

Thales

[Dinerotrader 10]

Hi imorgan,

 

I have a couple of questions:

 

1) Where was your initial stop loss?

 

2) What makes you think your support level "appears to have been too high"? Are you meaning that the spread took you in before a break of support? Or do you mean that you don't feel that you correctly identified a support level?

 

1. Initial stop was at 134.045...what I considered to be the closest natural stop.

 

2. Look at chart #2 on post of this trade. I mean I tried to identify a good S/R break but I couldn't decide if the 3 bars at the beginning of the dotted pink line were significant enough to require a break below and after watching the trade unfold, it appeared that I should have initially put the support level down to the pink line. At the pink line, support was holding which made me think the trade was taken at true support instead of at true breakout so why stay in the trade.

[Dinerotrader 10]

What made you decide to choose to take a long position there?

 

I wanted to be in a trade more than I wanted to be on the sidelines this morning, would be the most honest answer. I justified the long by thinking that the support at the pink line held so well that maybe we were on the way back up now that we bounced off support and broke above my "support zone". However, after noting on my chart that the resistance line I drew earlier was holding almost perfectly, (I didn't expect it to since my faith in diagonal S/R lines is still wavering) I am exiting that long trade. 2 bad trades but I think I definitely learned from the experience of trying to commit to a S/R level I drew and determine how to manage the trade.

 

I realized I was unsure how much of a breakout below support would consititute an appropriate entry. How do you determine how far the breakout needs to be before you enter? Do you base it on percentage or ticks?

 

I do like that moved up the stop once I realized I might have entered improperly. I don't want to have a habit of staying in trades that confirm I had poor entry analysis.

 

Your comments are welcome.

 

[thalestrader 14]

PLAN FOR TOMMORROW:...

 

Hi Forrest,

 

Thank you for sharing your work with us. I see that the NQ today found support at Friday's day session high. Do you figure these session highs/lows into your trading plan at all or do you find the globex highs/lows sufficient?

 

Just curious, is all.

 

Best Wishes,

 

Thales

[forrestang 10]

Hi Forrest,

 

Thank you for sharing your work with us. I see that the NQ today found support at Friday's day session high. Do you figure these session highs/lows into your trading plan at all or do you find the globex highs/lows sufficient?

 

Just curious, is all.

 

Best Wishes,

 

Thales

 

Yo Thales,

 

Honestly I was keying mainly on that 1520 level, I hadn't even noticed that we kept hitting the High of Friday. I was wondering WHY price wouldn't go to the bottom of the zone and tag 1520. I really wasn't interested in anything until we at least tested the 1520.

 

I was thinking that 1539 area did gains some significance today, since it wa tested quite a few times today it seems. I almost entered on a breakout today about 15 minutes before the close, but realized I wouldn't get any follow through with such short time left.

 

Right now, I feel like I dont' have a good solid way to enter.

 

About Globex and regular sessions, I used to have the regular session HLC on there, but now I am simply pulling levels off the 24 hour session.

 

Thanks for asking!

 

On another notes just about today's session, the NQ seemed to not behave the way I think it should for good trades? Did anyone else get this feeling? It seems like it wanted to break that 1539 level, but couldn't. And price seemd to just chop around all day?

[thalestrader 14]

I wanted to be in a trade more than I wanted to be on the sidelines this morning, would be the most honest answer.

 

Never a good reason to commit to risk, but I've been there, done that, and will do it again unless I have truly and finally wised up.

 

I justified the long by thinking that the support at the pink line held so well that maybe we were on the way back up now that we bounced off support and broke above my "support zone".

 

Ok, good, so it was based upon your interpretation of what you saw price doing, and not simply "panic" that you thought your short wasn't working and you didn't want to miss a chance to get your money back.

 

I realized I was unsure how much of a breakout below support would consititute an appropriate entry. How do you determine how far the breakout needs to be before you enter? Do you base it on percentage or ticks?

 

I do like that moved up the stop once I realized I might have entered improperly. I don't want to have a habit of staying in trades that confirm I had poor entry analysis.

 

I trade, and I have my daughter trade based on a one tick buy/sell stop. As she is trading forex through a dealer, she needs to account for the spread, so she usually will place stop entry at +/- 2x(Spread).

 

I would likely not have thought to trade that short trade, as price had just moved through a sizable rally. After such a rally, unless there is an immediate and sharp sell off, I would anticipate another period of consolidation, not unlike what we saw at the end of last week. Price could certainly be rolling over and reversing here, but I'm not smart enough to tell that just by looking at what is there right now.

 

That being said, had I thought to take that short entry, I think I'd have entered it exactly like you did, and I would likely still be short from approx 133.84, with a stop loss up around 134.5x, and a profit target around 133.5x. Of course, this would be another caution against the short trade, as the R/R quite frankly sucks as I'd be risking 65 ticks for a profit of 35 ticks. Perhaps a secondary target would be down in the vicinity of 133.00, but I always tell my daughter that the R/R should be close to 1:1 or better in favor of the trade at the closest high probability target.

 

If I had wanted to be a seller, I'd have felt better about either selling at the high today (take a look at a four hour chart and you'll see why) or else I would have wanted to sell the break of 134.27, with a stop loss at 134.67 and a first profit target at 133.85. My secondary target would be a bit above 133.50.

 

By the way, based on the chart, I do think that EURJPY will see 133.5x before it revisits the 134.7x high, so if I were to be in either of your two trades, I'd rather be in the short than the long. But who knows?

 

Best Wishes,

 

Thales

[forrestang 10]

By the way, based on the chart, I do think that EURJPY will see 133.5x before it revisits the 134.7x high, so if I were to be in either of your two trades, I'd rather be in the short than the long. But who knows?

 

Best Wishes,

 

Thales

 

Thales,

 

Do you think you can do a pre-day analysis? I'm not sure how you do it, or if you can get to it today.

 

I would suggest NQ, but I suppose any instrument would do fine? I'm just wondering if you prepare for things in a similiar fashion as I do, i.e. picking out S/R, or something else?

 

And actually, if anyone does anything simiiliar posting it would be great!!

 

Forrest

[forrestang 10]

I wanted to be in a trade more than I wanted to be on the sidelines this morning, would be the most honest answer. I justified the long by thinking that the support at the pink line held so well that maybe we were on the way back up now that we bounced off support and broke above my "support zone". However, after noting on my chart that the resistance line I drew earlier was holding almost perfectly, (I didn't expect it to since my faith in diagonal S/R lines is still wavering) I am exiting that long trade. 2 bad trades but I think I definitely learned from the experience of trying to commit to a S/R level I drew and determine how to manage the trade.

 

I realized I was unsure how much of a breakout below support would consititute an appropriate entry. How do you determine how far the breakout needs to be before you enter? Do you base it on percentage or ticks?

 

I do like that moved up the stop once I realized I might have entered improperly. I don't want to have a habit of staying in trades that confirm I had poor entry analysis.

 

Your comments are welcome.

 

 

Being stopped happens, doesn't mean the next trade will turn out the same way. I'm sure you already knwo this and I am being redundant.

 

I hope you continue to post your right edge reads as we'll all get something out of it.

 

From my experience, it's hard to even admit I was wrong to myself, let alone posting a right edge read for dozens to see that I was wrong as well. I'm sure this is something that will dissapate over time as one gains confidence in the things they see on their screen.

[thalestrader 14]

Thales,

 

Do you think you can do a pre-day analysis? I'm not sure how you do it, or if you can get to it today.

 

I would suggest NQ, but I suppose any instrument would do fine? I'm just wondering if you prepare for things in a similiar fashion as I do, i.e. picking out S/R, or something else?

 

And actually, if anyone does anything simiiliar posting it would be great!!

 

Forrest

 

Hi Forrest,

 

I'll be posting more once we get out of July. This is typically a month where my trading activity is greatly curtailed as I have family come in from out of state.

 

I hope you and imorgan (and hopefully others as well) will continue to contribute.

 

Also, as I am primarily a stock trader who trades stocks that have gapped open, I do not know the night before which stocks I will be trading the next day. So, while I scroll through the charts of the SP500 each night, I am not really doing the analysis such as you are doing with the NQ.

 

What I ave been doing lately is going over forex charts with my dauhter at night. These lend themselves much more to the type of analysis you are interested in, so I will try to post a forex chart here and there when something of interest presents itself. Otherwise, once I am back "full throttle," which will be after Labor Day, I will again post real time intraday charts/trades.

 

Best Wishes,

 

Thales

[thalestrader 14]

had I thought to take that short entry, I think I'd have entered it exactly like you did, and I would likely still be short from approx 133.84, with a stop loss up around 134.5x, and a profit target around 133.5x. ... Perhaps a secondary target would be down in the vicinity of 133.00 ...By the way, based on the chart, I do think that EURJPY will see 133.5x before it revisits the 134.7x high, so if I were to be in either of your two trades, I'd rather be in the short than the long.

 

Hi imorgan,

 

I didn't want to say much more yesterday, as I did not know whether youwere in a live trade or a demo trade, and I always like to avoid voicing an opinion contrary to another trader's current position while he is still in that position.

 

As I said yesterday with respect to your short entry, I thought you did do the right thing there. That certainly constituted for me a break down of what should have been support. That is why I asked you where your stop was and how you decided to get long. It looked to me like a panic move, i.e. "Oh my goodness I sold it short and its not going down so its going to go up so let me stop and reverse." If you are going to trade S/R, you can do it one of two ways:

 

1) You can buy support and sell resistance, looking for price to reverse at these levels, or

 

2) You can sell breaks of support and buy breaks of resistance, lookng for price to continue beyond these former stopping points.

 

You can, of course, trade both ways, which I imagine would make ofr a third way. My own preference, of course, is to trade S/R breaks for immediate trend continuations. Others prefer to trade S/R holds for immediate trend reversals (this means the trend that brought price to the S/R level, not the larger trend, of which, in this case, the "immediate trend" being reversed is but a pullback or reaction against a larger trend).

 

If you are going to trade breaks, then you need to determine how you are going to place your bet, and then you need to place your stop loss where, if price reaches it, the probabilities will have turned against price moving in your favor. Yesterday, your stop loss was placed smack dab in the middle of nowhere. If you sell a break of support, your stop loss must be placed above resistance, and vice versa for longs.

 

What you experienced yesterday is one of the two reasons that people sometimes say such silly things as "most breakouts are fakeouts." Untrue. Most breaks of support lead to a retest of a lower support level, and most breaks of resistance lead to a retest of higher levels of resistance. The problem is that sometimes a break up or a break down will do some further chipping away at S/R and add a bit more fuel before the move to the next level gets underway. When you exited the short and reversed to long, you became fuel for the move down. It is always nice when a break results in a real smash or lift off and price moves like lightening to the next anticipated level. But you need to be aware that sometimes price has a different itinerary than your desires. It will get to where it is going when it is ready, not when you are.

 

The good news is that you can identify these levels on your chart ahead of time. Once that level broke at which you sold short, then price was almost determined to head down to 1.3347-3350. It was just a matter of you having the patience to set your stop and sit on your hands. (Again, I would highly recomend anyone interested in learning S/R read over DbPhonix's posts, especially his recent posts in his "Trading with Forsight" thread).

 

The other reason people say that "most breakouts are fakeouts" is, of course, that they have mistakenly identified a minor wiggle in the middle of nowhere for a break of support or resistance. I think you identified a real support level, and you did the right thing by selling it. Next you need to work on letting the market develop as it will to deliver either your profit or your loss, and then move on to the next opportunity. This takes times, but you have made an excellent start.

 

Best Wishes,

 

 

Thales

[forrestang 10]

Was going to post a right edge but entered and stopped so fast I couldn't get it up here.

 

Anyways, was playing the level @ 1539.75, it looks as though this level has been violated, and price is hanging out in the middle of nowhere. Entered 1540.50, stopped 1538.75. Will continue to look.

 

Update 1:

Broke through 1539.75, next level to test is 1528 area.

 

Update 2:

Price broke through the 1539.75 level, towards the 1527 area. Price did not quite make it down that far, and is now retracing back upwards to 1539 area. Posting a small thumbnail just for depiction of what I'm seeing. Maybe this will be insight into the thought process trying to view the larger picture of what's going on? Putting this together into something tangible is a whole nutha' issue. Note: vertical line is about where we opened.

 

 

Update 3:

Still watching this area. Either this area I have isn't valid, I have recognized it wrong, or it's just one of those areas, but price either isn't respecting it, or this area is just not optimal for trading? I will stop until price moves away from here, i would probably get bleed to death trying.

Edited July 21, 2009 by forrestang

[forrestang 10]

Update 4:

Looking for BO.

[forrestang 10]

Update 5:

This is it, we'll see how it plays out, conservative targets in place, will move stop when available. Seems this entry is too high, close to the midpoint of this range. But whatever.

 

Update 6:

 

Update 7:

1st target hit. I th ink right now I would be thinking about pulling all out, or at very least TIGHTLY trailing the rest. We're approaching DTL in what I am just now realizing is a downward trending day, I am a dufus! But for the sake of the thread, will leave it alone, stop at BE.

Edited July 21, 2009 by forrestang

[forrestang 10]

Final:

Profit factor on day nothing to write home about. And looking at it and where S/R is, these entries are just God Awful. That post about entries is needed!!!

 

A note on the anchor chart.

The upper region of rectangle, or resistance was adjusted after the first failed long.

Edited July 21, 2009 by forrestang

[Dinerotrader 10]

I can't believe I missed this one. Got to my computer just a few minutes too late.

 

[forrestang 10]

I can't believe I missed this one. Got to my computer just a few minutes too late.

 

 

Can you describe what you're trading?

 

Was that green line the open of yesterday, and you were shorting the breakout once price had broken through it?

[Dinerotrader 10]

Wow, these charts can get very distorted if you post them from a larger monitor and them try to view them on a smaller screen. The arrow is pointing to a break of the prior day's low which I would definitely have played had I seen it in time. I am still doing extensive fine tuning of what S/R I breakouts I would trade but prior day lows and highs are almost always ones I would take.

 

From what I gather Forrestang, you are also working to trade mostly based on S/R. Did you see the posts in the P/L thread that Thales provided to my chart questions? Pretty good stuff.

 

Cheers.

[forrestang 10]

Wow, these charts can get very distorted if you post them from a larger monitor and them try to view them on a smaller screen. The arrow is pointing to a break of the prior day's low which I would definitely have played had I seen it in time. I am still doing extensive fine tuning of what S/R I breakouts I would trade but prior day lows and highs are almost always ones I would take.

 

From what I gather Forrestang, you are also working to trade mostly based on S/R. Did you see the posts in the P/L thread that Thales provided to my chart questions? Pretty good stuff.

 

Cheers.

 

Ok, I see what you are trading now.

 

Trading S/R is something I've looked into in the past(as seen in some of the screenshots I posted in that Brooks Thread), but could never get the handle on it. So this time as I'm looking into it luckily I'm not starting completely from scratch. But It's still a relatively new concept to me.

 

I did not see Thales's post. I don't get around much I think;)

 

I will take a look for it.

 

Forrest

 

 

-----EDIT-----

I'm in the thread, where should I start?

Edited July 23, 2009 by forrestang

[Gabe2004 10]

My first attempt @ this thread.

2 potential long and 1 potential short.

 

Gabe

[thalestrader 14]

The arrow is pointing to a break of the prior day's low which I would definitely have played had I seen it in time. I am still doing extensive fine tuning of what S/R I breakouts I would trade but prior day lows and highs are almost always ones I would take.

 

I think breaks of prior day highs/lows are especially hig probability trades in certain markets were the pit still has a lot of influence, e.g. bonds, notes, eurodollars, perhaps the softs and grains.

 

My experience has been that the S&P's prior highs and lows are often tested by a probing back and forth, and therefore, it is often better to wait for a break and hold. I may be wrong, but that is how it seems to me.

 

Good observation on the bonds, imorgan.

 

Best Wishes,

 

Thales

[thalestrader 14]

My first attempt @ this thread.

2 potential long and 1 potential short.

 

Gabe

 

Hi Gabe,

 

Good call on the short. My daghter and I were watching the EURJPY on the 1 minute chart (We're a couple of chart geeks - everyone else is downstairs watching a movie and we were watching a one minute currency chart - we even had a bowl of popcorn!)

 

The thick red horizontal trend line is one of her resistance points that she had drawn on her four hour chart. After price rallied through it last night (or this morning, I wasn't watching) one would have expected that it would have held as support on a pullback. Instead, price sliced right through it, chopped back up to, and you can see how that resistance reasserted itself as such. She didn't trade it, but she was tempted.

 

Your higher buy point would have been a break above that red resistance level. A recovery above there would likely have resulted in a retest of today's high. As it is, the EURJPY looks like it may be heading back to 133.37-133.50 before the weekend comes.

 

Thanks for sharing with us Gabe - please keep it up!

 

Best Wishes,

 

Thales