The Price / Volume Relationship

[vienna 10]

..... there would be not be an RTL BO since no FTT can occur without a dominant black move first .....

 

emac

 

Is this always the case?

TIA

[patrader 10]

Looking at this, how would you have known that any bar after bar 68 would/could NOT be the BO of the thick red down container? Or maybe it was?

 

The answers are somewhere within:

 

a) Order of events

b) Peaks and throughs

c) Lateral

d) Fractal nesting of containers

e) Gaussians

 

In THIS example I was "confident" that we would end up the way it is right now. However trading it with real money I would probably had been whipsawed.

 

By now maybe some of you already start to see how they would know that they know what must come next. I hope to join you soon.

 

Good luck.

 

Review the chart in gucci's #2718 post(page 272).Pay close attention to the dark blue up container's tls,dark red down container's tls and the thicker light green container's tls(at the extreme top and bottom of the chart).The thicker light green container is the slowest container that the market is building with the dark blue and dark red containers.On bar 58 the market bo of the dark blue up containers rtl on irv.What ensued was a faster down container that after pt 3(bar 62) ve'ed the ltl(bar 65).When the market builds one thing(dark blue up container) it usually builds another thing(possible larger slower down container) in the opposite direction.So if a trader is anticipating a larger slower down container being build they would read the ve at bar 65 was a possible pt 2 of the larger slower down container.When the market moves from pt 2 to pt 3(in a larger slower down container) it many times moves left to right in a lateral and/or slightly sideways up.Monitoring for a overall pace dropoff in a non-dom is very important .Look at the pace levels in the previous dark blue up container.Now look at the pace levels in this container so far.See the large dropoff in pace in this non-dom move.Notice the lateral that started on bar 65.See the non-dom sequence that played out starting on bar 68 and ending on bar 76 with the ibgs at the top of the lateral.On bar 77 the market confirmed(by making a LL) that the high of bar 76 was the pt 3 of the slower down container the market was building.This is where you fan your rtl to contain the price action(see gucci's red down container's rtl).Check out the irv on bar 77 and the prv irv on bar 78 that is just forming.After pt 3 in a down container the market always has irv.Once the market broke out of the bookmark(bar 65 swing low or pt 2) on bar 77 on irv,the next step is to monitor what happens during the traverse to the ltl of the slower down container.Look for sequence completion of the faster and slower down container being build.Next monitor for a signal for change that leads to a retrace back to the rtl.Then at some point a rtl bo on ibv will occur that begins building another dark blue slower up container to complete building the thicker light green slowest container.Wash,rinse,repeat.hth

[emac 10]

Is this always the case?

TIA

 

From what I understand now, an FTT is a failure to traverse to the LTL and it must happen on a dominant move. So conversely, if it hit the LTL, then it can't be an FTT.

 

A VE can be different in that what appears to end might already have a lower fractal m1 m2 move for the ftt to occur within the 5 min bar (credit to EZ).

 

According to Jack, an FTT must occur on a dominant traverse. I would understand that to be when looking for an FTT on the tape fractal, I would need to see a dominant bar in this case. I can't say if that is always the case but right now, this is what I look for prior to any FTT.

 

emac

[patrader 10]

I must be missing something? Please see attached...BTW, this bar-by-bar stuff is super helpful- thanks!!!

 

Good eye.Actually my comments apply to the next bar (bar 48).hth

[emac 10]

Review the chart in gucci's #2718 post(page 272).Pay close attention to the dark blue up container's tls,dark red down container's tls and the thicker light green container's tls(at the extreme top and bottom of the chart).The thicker light green container is the slowest container that the market is building with the dark blue and dark red containers.On bar 58 the market bo of the dark blue up containers rtl on irv....

 

Hi patrader,

 

Are you referring to the same chart in gucci's #2718 post ? If so, bar 58, which should be at 2:20 pm (EST) - it is showing dbv and not bo of the dark blue channel. So I am not sure which chart are you referring to or the time on the chart is not on EST ?

 

TQ.

[vienna 10]

2 Newbie question:

 

You have 4 fractals on the chart. I thought there were normally 3 and you trade the middle one for coarse level.... Is the green lt channel the 4th one and would you trade the dark green/ orange traverses for coarse?

[vienna 10]

Hi patrader,

 

Are you referring to the same chart in gucci's #2718 post ? If so, bar 58, which should be at 2:20 pm (EST) - it is showing dbv and not bo of the dark blue channel. So I am not sure which chart are you referring to or the time on the chart is not on EST ?

 

TQ.

 

I think he starts numbering the bars at the left side of the screenshot, not at the open...see the chart in my last post for the bar numbers....

[patrader 10]

Hi patrader,

 

Are you referring to the same chart in gucci's #2718 post ? If so, bar 58, which should be at 2:20 pm (EST) - it is showing dbv and not bo of the dark blue channel. So I am not sure which chart are you referring to or the time on the chart is not on EST ?

 

TQ.

 

Don't you just luv(not) this form of communication.In frenchfry's #2757 post there is a chart that shows a portion of gucci's larger chart from #2718 post.Frenchfry was so kind to put bar numbers on his chart post.My comments about bar numbers refer to bars on frenchfry's chart with matching numbers.Vienna was nice enough to post a chart (#2781)that highlites the bars in question.Use gucci's chart for bigger picture (slower containers) and frenchfry's for more detail on the last slower down container and the faster containers nested within it.hth

Edited March 13, 2011 by patrader

[cnms2 10]

(using Gucci's DAX H11 chart) Which set of annotations makes more sense?

a) green, red

b) blue, purple

To me, they both make sense. Starting from the same volume information, they're intended to highlight different things:

a) dominance

b) sub-fractals.

[gucci 10]

Thank you to:

 

pr0crast, cnms, cory, patrader and emac

 

for sharing your point of view!

 

cnms,

 

looking at your gaussians I'm sure in realtime I would have drawn them differently. The reason is surely a gap in my knowledge and because I only see "chaos" in the volume pane.

 

When I put price into containers then volume is making peaks and throughs. However the sequence of B2B2R2B or R2R2B2R is not visible for all containers. I can for example see in one container a B2B followed by another container which shows R2R. So the art seems to be to see what is not there (because it is only visible in smaller time frames?) and/or sometimes ignore what you see and simply follow how price moves inside your current container(s) and nests?

 

Enclose you can see what I would have drawn and above what I mean by a container can have incomplete volume sequences.

 

Welcome back to a serious discussion.

[gucci 10]

Thanks Gucci for the chart ---it highlights a few of my delimmas and I'm hoping to sort some of them out once and for all.

 

In my opinion

1) We can't have FTT at any of these bars because we have yet to have return to Dom---as defined by Vol. on a level of that at red "a" or previous black peak???? I'm just guessing for in realtime I would have seen the 2nd bar as a Jakari change and the 3rd as FTT for sure

 

2) On an unrelated topic----how can Pt. 1 be a FTT when it does in fact traverse and even extend on what seems to be an acceleration of Pace??!!!!

 

3) Assuming FTT at Pt.1, how can Pt. 3 be so far into the previous up traverse?? After the BO of the lateral at Pt.2 (which moved so far into the previous) I would have ceased to look for Pt.3 and assumed an error in annotation leading to a continuation of Dom. Up

 

Could anyone give some insight---

 

Vienna--I really appreciate your questions and can relate to your frustration.

 

 

Sorry for being tardy in response.

 

Re.1. You are right. On the three bars in question we do not have a dominant tape. Look closely at those bars. Note the first encreasing vol results from the bo of a pennant. Right after this bar you get decreasing vol. The third bar shows you all of this volume resulted from traders who were on the wrong side of the market in this pennant. No comparison with any peaks. HINT!!! Look at the 12:30 bar and the lateral that it formed...(not properly annotated on my chart) Is this lateral over at the time in question? Do you understand now how important thorough annotations can be?

 

Re.2. You can get a completion of the faster fractal along with the completion of the sequences on the slower fractal to witness such an occurance. Read the post from Jack that was linked here.

 

Re.3 Well, you can assume anything you want, but I do not remember that there is any requirement for a point 3 being far or not to far into the previous traverse. Stop inventing.

 

HTH.

[Corey 10]

... (because it is only visible in smaller time frames?) ...

 

if its visible in smaller tf then its visible on bigger tf, why?

 

because a smaller container builds a larger container.

[cnms2 10]

Thank you to:

 

pr0crast, cnms, cory, patrader and emac

 

for sharing your point of view!

 

cnms,

 

looking at your gaussians I'm sure in realtime I would have drawn them differently. The reason is surely a gap in my knowledge and because I only see "chaos" in the volume pane.

 

When I put price into containers then volume is making peaks and throughs. However the sequence of B2B2R2B or R2R2B2R is not visible for all containers. I can for example see in one container a B2B followed by another container which shows R2R. So the art seems to be to see what is not there (because it is only visible in smaller time frames?) and/or sometimes ignore what you see and simply follow how price moves inside your current container(s) and nests?

 

Enclose you can see what I would have drawn and above what I mean by a container can have incomplete volume sequences.

I've marked on your char what I see at that level. It's very close to what you've drawn when you relied on volume.

 

I don't think it's an "art", and I don't think there's ever a situation in which I have to "ignore" what I see. There might be possible to correctly monitor just watching how the price moves, but for me volume is of paramount importance. Jack stated that he could trade just based on volume data, and I think it's possible.

[frenchfry 10]

if its visible in smaller tf then its visible on bigger tf, why?

 

because a smaller container builds a larger container.

 

Hi Cory,

 

just to be sure we mean the same with tf (time frame)... what I meant was that if you look at that chart example, you see a 5 min chart with a few "containers" (I mean the smallest that Gucci drew). Looking at the corresponding volume peaks an throughs the "complete" sequence (i.e.B2B2R2B) is nearly never completely visible on that (container)level. However if I would go down in the "time frame" and open a 1 min or 2 min chart then looking at the same containers you would probably see the complete volume sequence for that container.

 

Did you mean the same?

 

Thanks.

[Corey 10]

Hi Cory,

... However if I would go down in the "time frame" and open a 1 min or 2 min chart then looking at the same containers you would probably see the complete volume sequence for that container.

 

Did you mean the same?

 

Thanks.

 

 

as long as you see a complete volume sequence and a container for that vol sequence then you know wmcn, if you know wmcn then you can enter.

[pr0crast 10]

I'm partway through this thread, so excuse me if this has been covered, but if any other contributors to the thread have or would like to start a chat room to discuss critique execution, please PM me.

[TIKITRADER 10]

Funny... today takes me back to all those conversations with Spyder about 3 decreasing volume bars on open look for ' w ' or 'm ' days. I had a headache for months LOL

[kidpwrtrader 10]

I have a quick question regarding PRV. Pardon me if this is a concept that is too remedial for this thread. If it is, I am happy to hold off on it while I search for it myself.

 

Is there a "too early" to use PRV. Obviously, at the start of every bar we have people who initiate due to various systems. This is especially true for the start of day where things "synch" up.

 

Therefore, is there perhaps a certain threshold one should be using of DU for instance (if trading stocks) so that these effects are countered?

 

This is not mentioned in journals one nor journal 2 on the equities thread so maybe this is a non-issue completely. Obviously, its not a pre-requisite.

[vienna 10]

Attached please find Jack Hershey's Document "Clean page 4", but for a down-channel...perhaps somebody finds it useful, HTH

[pr0crast 10]

Great post. I am a 25 year student of volume and range analysis and I would urge that all volume is not created equal. In other words, volume seems to have some analytical or predictive value only when the volume correlates to an instrument that is not dependent on the price movement of another instrument. For instance, the ES (Emini S&P 500)--when the S&P 500 Cash Index is increasing in price, the ES will follow, regardless of the volume. A multitude of program traders assure the price of the two instruments stay within fair market value of one another. But this cannot mean that the ES volume holds predictive value for the cash index it follows. With that said, it can reasonably be argued that the ES influences the cash market prior to the cash market opening. But that influence is shortly lived. In the end, and as the old saying goes, cash is king.

 

The people here can get a little touchy Thanks for posing an extremely interesting question. Though volume is always useful, I have found it useful in oddly different ways depending on the instrument being traded (i.e. tick volume on Forex). This tells me that there is a fundamental difference in what's going on, but I don't really know what. I guess I don't really care either, but it's interesting to think about.

 

Something to ponder: Despite the fact that there are arbitrage systems out there keeping the cash and futures in line, you can admit that there are traders of ALL TYPES on the ES, trading for entirely different reasons and using different techniques. This means that there are all kinds of orders floating that may or may not be paying explicit attention to the cash index. When price MUST pass through an area because an arbitrage opportunity, it has to pass through those floating orders. That prints as "volume". If we see a lot of that, we know which direction the market is moving in, resistance be damned. Thankfully, the market tends to move in waves, which creates opportunities if you are confident in its current direction.

[islandboyz 10]

I'm stuck. Today, March 23, at 14:50, the 2 min YM began a run up that lasted for about 8 minutes. At the same time volume was decreasing. This was indicative of a black non dom retrace in a red channel, but it was a dom move in a black channel. Therefore, this would suggest I was on the wrong fractal. But if there is another larger red fractal that makes sense of this, I can't find it. What am I missing? Any explanation of this would be helpful to me. TIA.

[pr0crast 10]

I'm stuck. Today, March 23, at 14:50, the 2 min YM began a run up that lasted for about 8 minutes. At the same time volume was decreasing. This was indicative of a black non dom retrace in a red channel, but it was a dom move in a black channel. Therefore, this would suggest I was on the wrong fractal. But if there is another larger red fractal that makes sense of this, I can't find it. What am I missing? Any explanation of this would be helpful to me. TIA.

 

Look at the range, open, and close of each of those bars on decreasing volume. The range is getting smaller, and the close is getting lower and lower on the bar. In other words, the 2m bars are becoming less and less "black" as the balance between buyers and sellers shifts. If you were looking at 30 second bars, you'd probably see a B2R2B2R2B2R2B-ftt-2R2R. Not that you should look at 30 second bars... but the price action is telling a story.

 

Looking at 5m ES bars, you see the same thing play out all the time.

[Ezzy 10]

I'm stuck. Today, March 23, at 14:50, the 2 min YM began a run up that lasted for about 8 minutes. At the same time volume was decreasing. This was indicative of a black non dom retrace in a red channel, but it was a dom move in a black channel. Therefore, this would suggest I was on the wrong fractal. But if there is another larger red fractal that makes sense of this, I can't find it. What am I missing? Any explanation of this would be helpful to me. TIA.

 

Gaussians must match your trend lines. Even though volume peaked early in the move, price continued in the dominant direction. There hasn't been any change yet. Continue the gaussian to match the price peak or price trough.

 

On the flip side sometimes you may be drawing a decreasing gaussian to or through an increasing volume bar. For example if you went B2B pt1 to pt2, and then in the middle of going 2R (decreasing volume with decreasing price) you get an increasing volume bar, would you change your decreasing red gaussian to increasing red? Or draw in an R2R for that leg? No. There may be a dominant red on a lower fractal, but not on the same level you're annotating.

 

One suggestion. Posting a larger section of the YM chart and the ES would have been helpful.

 

Annotating gaussians to the max/min of price movement is different from some of the older charts you may have seen on another site.

[pr0crast 10]

Gaussians must match your trend lines.

In case this seems arbitrary or counter intuitive, since gaussians are supposed to define the channel -- not the other way around, this statement reflects the often inexact nature of our 5 minute market lens and the need to account for that rather than blindly go by what the chart says. If you use your imagination to look into the 5m bar and think through what happened, and where the dominant volume was, your gaussians will match your trend lines.

[CDNpatriot 10]

Just wanted to clear up somethings with Journal 1 and Journal 2 that Spydertrader was involved with at ET.

 

A programmer has some questions for me.

 

Are the indicators used (MACD, Stochastic) based on daily bars, if not on what are they based?"

 

Are they basd on daily bars, but entries are end of bar based on 30 minute bars?

 

With the 30 Minute bars, so are buys and sells only on 30 minute close of bars or intrabar? If intrabar, do we need the 30 minute bars for something?

 

Thanks!