The Price / Volume Relationship

[MKTr 10]

SK0,

 

It is my understanding that a L2 B2B consists of a single L1 b2b2r2b. Think of the B2B as a single leg not two.

 

MK

[cnms2 10]

Three fractals. Look for overlap.

[Spydertrader 10]

As a follow up to our Las Vegas Meeting, I will (from time to time) post a drill (or a chart section) chosen specificaly for its ability to illuminate the current environment.

 

Attached, please find a Differentiation Drill which focuses on Lateral Formations. At first glance, many will see these three examples (highlighted in blue) as exactly the same and without difference. Feel free to work within this thread, offline, in small groups, in large groups or all by your lonesome - whatever way you feel best suites your needs.

 

1. Do not overcomplicate.

 

2. Do not overcomplicate.

 

3. Do not overcomplicate.

 

4. Locate the subtle (or not so subtle) differences.

 

5. Determine what (if any) information the market provides based on these differences.

 

6. Note what the market provided next.

 

7. In the future, when 'seeing' a repeat of one of these examples, compare the outcome.

 

8. Note what (if anything) you learned from the process.

 

9. Wash. Rinse. Repeat.

 

10. Do not overcomplicate.

 

The above drill focuses only those Lateral Formations Highlighted in Blue. Done properly, this drill will point out a few items many have overlooked.

 

Good Trading to you all. :D

 

- Spydertrader

[frenchfry 10]

This is what I can see so far:

 

- The first lateral is in the dominant direction of that blue channel. If it breaks out with rising black volume in the dominant direction, the trend should continue. If not then it will go down?

 

- The second goes in the non-dominant direction. It breaks out in the dominant direction. But probably volume would have told me that it is not yet finished (traveling from pt 2 to pt 3?).

 

- The third one starts with an IBGS bar or outside bar and then continues in the dominant direction. On the break out in the dominant direction black volume should increase?

 

How are they the same? Maybe: They are all laterals?

They all contain hitches. But don't ask me what it means.

 

Even though this is all I can see so far, this is still more than what I could see before Vegas. Therefore big thanks to Todd and greetings to everybody else.

[TIKITRADER 10]

Spy Drill . . . keeping it simple

[TIKITRADER 10]

I cannot follow what you mean here. Could you expand? Thanks.

 

 

 

yes, no problem. I will answer you today I have to step out this morning.

[become 10]

As a follow up to our Las Vegas Meeting, I will (from time to time) post a drill (or a chart section) chosen specificaly for its ability to illuminate the current environment.

 

 

...

 

The above drill focuses only those Lateral Formations Highlighted in Blue. Done properly, this drill will point out a few items many have overlooked.

 

Good Trading to you all. :D

 

- Spydertrader

 

They don't look at all 'the same' to me. But to clarify, do you mean only the differences visible in this snippet as posted (that is, differentiation based only on price action, without reference to either volume or time of day)?

 

- become

[ramora 10]

Spyder Drill Differentiation:

 

1st examine the object:

Laterals without volume data I would say are equal - no bias.

 

2nd examine the container:

Lateral 1 part of a faster dominant tape. - bias higher

Lateral 2 & 3 are in a traverse from the dominant channel - bias higher

Third lateral is after a pt2 has been closed above the second lateral - bias higher

 

3rd examine the context

Time of day etc - no bias

Up gap from previous day - bias higher

Edited December 22, 2009 by ramora

[MKTr 10]

Response to Spyder's Drill on Lat Form Differentiation:

 

1. Keeping it simple: the Lateral Formations are differentiated according to where they form with regard to the PV sequence.

 

2. Differences:

a. Lat #1: Bar #1 formed pt2. At bar #3 we had pt2 needing pt3.

b. Lat #2: Formed after pt3 and completed the sequence.

c. Lat #3: Bar #1 formed pt3 and we completed the L1 sequence.

 

3. Information (what to anticipate):

a. Lat #1: Anticipate a BO up to form a pt3 and complete the sequence.

b. Lat #2: Consider the Lat as potential Signal for Change

c. Lat #3: Potential SFC on L1 but would also have to complete the L2. Since we didn’t have a L2 pt3, we would anticipate that the Lat would provide the L2 pt3 (i.e. BO up).

 

4. What Did Come Next:

a. Lat #1: BO up.

b. Lat #2: SFC occurred, taped ended, Lat contained pt1 of new tape.

c. Lat #3: BO up providing L2 pt3.

 

5. What I learned: I had been attempting to view Lateral Formations with regard to the first bar that forms them. I believe I now see them (but need more observation) more accurately (better differentiated) as a sideways (with subtle but key vertical pieces) component to sequence completion - more wholistic.

 

MKTr

MKTr response to Spyder Drill on Lat Forms.doc

[innersky 10]

As a follow up to our Las Vegas Meeting, I will (from time to time) post a drill (or a chart section) chosen specificaly for its ability to illuminate the current environment.

 

Attached, please find a Differentiation Drill which focuses on Lateral Formations. At first glance, many will see these three examples (highlighted in blue) as exactly the same and without difference. Feel free to work within this thread, offline, in small groups, in large groups or all by your lonesome - whatever way you feel best suites your needs.

 

1. Do not overcomplicate.

 

2. Do not overcomplicate.

 

3. Do not overcomplicate.

 

4. Locate the subtle (or not so subtle) differences.

 

5. Determine what (if any) information the market provides based on these differences.

 

6. Note what the market provided next.

 

7. In the future, when 'seeing' a repeat of one of these examples, compare the outcome.

 

8. Note what (if anything) you learned from the process.

 

9. Wash. Rinse. Repeat.

 

10. Do not overcomplicate.

 

The above drill focuses only those Lateral Formations Highlighted in Blue. Done properly, this drill will point out a few items many have overlooked.

 

Good Trading to you all. :D

 

- Spydertrader

 

The first lateral looks like a classic non dominant lateral. Price exits on increasing dominant volume. I only wonder if the sym pennant has to be red instead of black?

The second lateral starts the same, but the sequence completes inside the lateral, after having a VE.

The third lateral starts at pt3, and I think this one can be ignored as it's a dominant lateral.

 

In other words, the first one sits between pt2 and pt3,

the second one between pt2 and the FTT,

the third one between pt3 and the FTT.

 

--

innersky

[double eagle 10]

Here is my stab at it. These are some questions I asked myself when looking at the chart. The answers (ramblings) are a reflection of my current level of understanding and hopefully don't confuse others.

 

Q1: How could the laterals have been anticipated?

lateral 1: Volume accelerated to the highest volume of the day creating a peak. A lateral should be anticipated. On top of that this occured at 4:00 pm and the next bars usually have a volume drop off which would further make one anticipate that there wouldn't be enough volume to continue translating.

lateral 2: Pace jumped to extreme levels after volume drop from the market open. Anticipate a lateral as volume continues to drop off.

lateral 3: Pace accelerated creating a wide ranging OB, but the bar closed inside the previous bar. Anticipate more lateral movement with volume continuing to drop off.

 

Q2: Where are we in the tape/traverse sequence?

lateral 1: This is the third tape of the traverse (after pt. 3). The lateral is entered as we search for pt. 2 of the tape. This tape is later accelerated after pt. 3.

lateral 2: The original traverse is VEed. This lateral is part of the non-dominant tape that occurs after the VE. An accelerated traverse is being created. The lateral is entered after the pt. 3 of the tape.

lateral 3: This lateral ocurrs on the third tape of the accelerated traverse. The lateral is entered as we search for pt. 3 of the tape.

 

Q3: Can tape level change occur within the lateral?

lateral 1: No. We haven't reached the tape pt. 3 yet.

lateral 2: Yes. The tape pt. 3 has already been reached.

lateral 3: No. We are still moving laterally, looking for a return to dominance to confirm a tape pt. 3.

 

Q4: Is this a dominant or non-dominant lateral?

At my present level of understanding, I see non-dominant laterals as ones that create pt. 2 to pt. 3 movement. I see dominant laterals as ones that create pt. 1 to pt. 2 movement or post pt. 3 movement.. Hopefully this terminology doesn't contradict the working definition layed out in this thread and what was presented in Vegas.

 

lateral 1: The first bar made a HH in the dominant tape direction. However, it did it on volume that peaked with an acceleration of the gaussian slope. Therefore, I view this lateral as beginning with a signal for change on the sub-fractal level which creates pt. 2 on the tape level. I view this as a non-dominant lateral which creates pt. 2 to pt. 3 movement. Anticipate a BO up and into the trend post tape pt. 3.

lateral 2: The first bar made a LL in the dominant tape direction post tape pt. 3. I view this as a dominant lateral that can have a tape level signal for change in it.

lateral 3: The first bar was an OB on increasing volume. However, it closed back inside the previous bar. Price hadn't finished moving laterally. I view this as a non-dominant lateral that continues the tape level pt. 2 to pt. 3 movement. Anticipate a BO up and into the trend which creates a tape pt. 3.

 

Q5: What does volume tell us inside each lateral?

lateral 1: decreasing non-dominant volume, followed by increasing dominant volume that takes us out of lateral. This is what is anticipated. I assume that there is a complete non-observalbe (on the ES 5min.) sub-fractal r2r2b2r within the lateral that gives us the 2r of the tape volume sequence. I know the sub-fractal sequence has completed once there is a return to dominant volume within the lateral.

lateral 2: The 1st bar was followed by decreasing non-dom volume. The fourth bar was a return to dominant red volume. However, the bar FBOed the EH signalling change within the lateral. I view this as the accelerated tape r2r2b2r completing in the lateral. Next, increasing red turned to increasing black (change in dominance) and the accelerated tape was BOed. Therefore, volume telegraphed a tape level change within the lateral.

lateral 3: decreasing non-dominant volume followed by increasing dominant volume that takes us out of the lateral. The sub-fractal r2r2b2r though not observable, must have completed with the return to dominant black volume.

 

Q6: What role do the VEs seen on the first bars play in the laterals?

lateral 1: the sub-fractal trend VEed on the first bar of the lateral. The non-dominate and then dominate sub-fractal movement following the VE can be unobservable on the ES 5min.

lateral 2: The down tape was VEed on the first bar of the lateral. I anticipate non-dominate then dominate movement. This accelerated tape movement completed with the EH FBO on increasing volume.

lateral 3: N/A

[Spydertrader 10]

But to clarify, do you mean only the differences visible in this snippet as posted ?

 

No.

 

I intended the information previously posted to included ensuring everyone focused exclusively on the three Laterals Highlighted in Blue, and (for the purposes of this specific excercise) ignore any and all other Laterals which devloped during the day. I did not intend for those working through the exercise to focus solely on Price.

 

HTH.

 

- Spydertrader

[rs5 10]

Lateral Drill

 

Lateral 1, 2 and 3 How are they the same?

 

1. All three laterals are dominant laterals within their own respective small container.

2. All three laterals are in containers on the same fractal.

3. All three laterals have a sym relationship between Bar 1 and Bar 2.

 

Laterals 1, 2, 3 How are they different?

 

1. Lateral 1 bridges two different trading sessions (end of one and beginning of the other) while Lateral 2 and Lateral 3 occur in the same trading session.

2. L1 and L3 have all bars contained within Bar 1 high and low except the bar with exits Bar 1 boundaries and closes outside the lateral. L1 exits with a VE bar. L2 has a protrusion outside of Bar 1 which closed inside the lateral before the exit bar.

 

How does the lateral start?

1. Lateral 1 Bar 1 is a VE bar in the direction of the container move.

2. Lateral 2 Bar 1 is a VE bar in the direction of the container move.

3. Lateral 3 Bar 1 is a OB UP, a reversal bar to the move just prior to the lateral.

 

Are there any differences in the inside formations?

1. L1 inside formations: Sym, Stitch Long – Lateral exit continue long

2. L2 inside formations formed several overlapping flaws: Sym, hitch, stitch short – Price test Bar 1 low then tested and broke Bar 1 high then exited long.

3. L3 inside formations formed several overlapping flaws: Sym, FBP, Hitch, Hitch, Stitch Long exiting Bar 1 high and closing above the lateral.

 

What is the relationship of the bars to the lateral boundaries?

1. L1 price hovered at lower half of lateral, tested Bar 1 low twice before breaking Bar 1 high in VE bar and closed above lateral.

2. L2 price hovered at lower half of lateral, tested both Bar 1 low and bar 1 high, before closing above bar 1 high. It took 2 tries to exit and close above lateral.

3. L3 price hovered at upper half of lateral, tested bar 1 high, never came to lower part of lateral, and closed above the lateral at first break out of bar 1 high.

 

What came after the lateral?

1. L1 exits with a VE bar in the opposite side of where price entered – continuation

2. L2 exits on the same side of where price entered the lateral – reversal

3. L3 exits in the opposite side of there where price entered - continuation

[sambrown 10]

My take on the lateral drill.

 

#1. Pt2 to Pt3 lateral movement. Broke out the opposite direction as coming in - continuation as PT3.

#2. Lateral movement after Pt3. Broke out the same direction as coming in - end of traverse and change.

#3. Same as #1.

[trader1109 10]

Here's my try...

[gosu 10]

Assume market continuous function.

 

A: First l2r of channel, p3; failed fbp, cont.; hold or enter @ p3 if not already in. Exit (not reverse) @ ltl and relax during second l2r; reenter @ rtl for either full or small r2l traverse.

 

B: Second channel, decl. pace; low volat l2r after VE on 2nd r2l traverse; anticipate bo of VE rtl and retrace to rtl of channel. If short from ftt of prior channel or p3 of current, exit or reverse into long for wash practice.

 

C: Nontrending after bo of 2nd channel. Centering and high risk. Exit wash trade and sideline.

Edited December 24, 2009 by gosu

[ptunic 10]

Tuesday, December 29, 2009

[MKTr 10]

Happy New Year!

 

I wrote a TS paintbar study to remove gaps. Wow. Unless I am missing something, the daily data looks profoundly different with gaps removed. If I did this correctly, it would be challenging, if not impossible, to accurately analyze daily data without gap removal.

 

MK

[midtown 10]

Re: Spyder lateral drill

 

Maybe oversimplified, but in the 3 cases of a lateral formed from a sym pennant, no matter from which direction price enters the formation, price changes direction inside and exits in the dominant direction.

[rs5 10]

Happy New Year!

 

Monday 4 Jan 2010

[rs5 10]

Tuesday 5 Jan 2010

 

The sequence I was expecting early in the day did not play out as I anticipated, but looked to form a nice pt 3 in the pm. Let's see what tomorrow brings........

[trader1109 10]

[Spydertrader 10]

7. In the future, when 'seeing' a repeat of one of these examples, compare the outcome.

 

8. Note what (if anything) you learned from the process.

 

9. Wash. Rinse. Repeat.

 

1. Tuesday (01-05-2010) @ 15:10 (all times Eastern and [close of] ES bar), the market provides a Lateral. Does this look the same or different than an example from The Lateral Formation Drill?

 

What were the outcomes of each?

 

What did (should) one learn?

 

2. Wednesday (01-06-2010) @ 12:15, the market provided another example of a Lateral Formation, which forms like another example within The Lateral Formation Drill. Does this example look the same or different than an example from The Lateral Formation Drill?

 

What were the outcomes of each?

 

What did (should) one learn?

 

3. Wednesday (01-06-2010) @ 14:40, the market provided yet another example of a Lateral Formation, which forms like a third example within The Lateral Formation Drill. Does this example look the same or different than an example from The Lateral Formation Drill?

 

What were the outcomes of each?

 

What did (should) one learn?

 

- Spydertrader

[rs5 10]

Wednesday 6 January 2010

[TIKITRADER 10]

Monthly ES and DJI charts