Firewalker's Journey: A path of discovery in search for enlightenment

This is a discussion on Firewalker's Journey: A path of discovery in search for enlightenment within the Trading Journals forums, part of the Reception category; And . . ....

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Old Aug 3, 2006, 2:39am   #50
 
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And . . .
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Old Aug 3, 2006, 7:29am   #51
 
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Originally Posted by dbphoenix
And . . .
In the previous post, you said you sometimes leave out the S/R lines when they're obvious.
Well perhaps they aren't so obvious to me, take this chart, why not draw a supply line now instead of a resistance like the purple one in the previous chart I mentioned.
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Old Aug 3, 2006, 7:37am   #52
 
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Quote:
Originally Posted by dbphoenix
The pink line is a supply line. The blue line is a demand line. In this case, they show a hinge (see post 44 in the PV thread). I don't always draw every S/R line, esp if I can see them without drawing them, such as when they're obvious, as here.

In this case, price breaks out of the hinge in Nov '05. It retests the hinge, then makes another try. This doesn't get anywhere either and returns to the hinge. In these cases, price often exits the opposite side, as here. The red lines (uploaded as brown) were drawn across points that had been repeatedly tested. The lower one turned out to provide temporary S last June. The upper one also provided R in the same month.

As for future S, each succeeding swing low on the way down might provide some S, like falling down the stairs, but who knows? I'll see what happens if and when we get there.

I don't pay any attention to the volume. But it's too much trouble to cut.

Db
I'm not sure if I'm following though. You said I should look for points where price interacts more than usual. Then for me this means look at volume and see if it increases, decreases are stays the same for a couple of bars. It also means check if bars are small or widespread, are the wicks long, small in comparison to the bodies and how frequently that point is being passed from the down- or upside.

From my point of view, I'm not seeing a hinge at all, I see an uptrend perhaps at best. Because the lows are higher each time, and the highs keep reaching higher (green line). If they're are so many ways of interpreting a chart, how can I possibly develop an entry strategy if I'm at a loss to distinguish is price is trending up, ranging between S/R or something else?
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Old Aug 3, 2006, 8:16am   #53
 
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Quote:
Originally Posted by dbphoenix
I'm beginning to lose track of where we are. I still don't know what you want me to look at in the three charts you posted. The "air pocket" I referred to occurs near the end of the day before you entered your short.

Note in the chart below that there are no trades in this area for at least several days. This is in part what enables price to rise so far so fast. Because there's so little support within that pocket, traders will try to find S as price makes the return trip, but the probabilities lean toward a drop toward the bottom of the pocket. Apparently, it's already well below that (it's difficult to tell since not all your charts have dates on them, so I'm not sure what goes where).

Db
I was trying to point out that a similar situation occured intraday basis. As you mentioned you found that after the air pocket there was a high probability short. I assumed that was because of the lack of support within the pocket as you mentioned plus the sudden high volume up marubozu.

Now I attached both charts. I don't know if I can find two charts that look more the same than that... At the first weekly chart there's the air pocket near the end of the day as you pointed out (btw are you implying timing makes a difference?). At the second chart (2nd August 2006) these are the similarities I see:

- airpocket at 1100
- uptrend before
- zip support in pocket
- decline in volume after airpocket (retracement)

Instead of dropping down further, it actually moves up a higher around 1215.
You said I'm perhaps looking at too many things, so I took volume out of the equation but left it on the chart.

In hindsight didn't volume give me a hint? On the first weekly chart the airpocket was filled with volume that amounted to the double of previous top -> extremely high volume, warning sign. On the second chart volume @ 1100 was the same, but at 1215 it made a higher top with lower which indicates possible end of the uptrend.


I need to know whether I'm going in the wrong direction here, so you may be blunt and say so if that's the case.


Quote:
Originally Posted by dbphoenix

Apparently, it's already well below that (it's difficult to tell since not all your charts have dates on them, so I'm not sure what goes where).
Yes, I've attached a new monthly chart in next post where you can see it went all the way to 5612.
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Old Aug 3, 2006, 10:45am   #54
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Allow me to address this BOZO (High Volume up or down bars, where open and close are at opposite ends) issue:

1. First of all the 2 charts of on different timeframes, the left I guess 60min, the right on 5min.
2. Volume considerations do play a significant role in such circumstances especially in respect of important support/resistance levels. However the principles of Selling and buying pressure applies across the board , on any time frame and in any liquid market.

3. POTENTIAL WEAKNESS APPEARS ON UPBARS ESPECIALLY IF THERE IS HIGH VOLUME
Whether it will reverse from here to form a downtrend or simply retrace and continue depends on the bar formations and accompanying volume on the ensuing bars as they unfold.

4. The Bozo in question is on the 28th of July, bring up a 120min chart and if you look left there is huge congestion zone between 5700-5750 , that is the potential supply area, so initially the Bozo suggested that all that selling emerged from that zone where traders were locked up. This then is the first sign of shorting opportunity.
5. Now if you drop down to say 30min or 15min bars from then on, you will notice lots of downbars on high vol, followed by markup in prices which culminate on narrow upbars on low volume (NO DEMAND) and also supply coming in at lower price levels, This can be termed as a mini distribution phase
6. The best trading opportunity under these conditions come in the form of an Upthrust, where the prices are marked up to catch stops and prices then reverse, refer to a 15min chart and look at the bar at22hrs on the 28th, similarly the 14.45bar on the 1st August.

7. As for the 5min chart of the 2nd August, the scenario is different, there is a support level at 5665, the upbar on high vol (BOZO) at 11.05 is a potential signof weakness, however if you observe closely the retracement is on low vol (reduction in selling pressure, followed by a hammer on high vol, suggesting demand has entered the market, this is then followed by few bars up and further testing on downbars, however to observe this you will have to drop down to a 3min or 2min where these downbar testing low volume are clearly evident, This then now is a sign of strength and a low risk, highprobability long trade,does not automatically indicate that prices are going to rocket skyward but your target to the previous swing high i.e 5670 is viable, afterthat a traders trade management skill has to take over.

Will try to get the charts in word doc if you wish and attach later
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Old Aug 3, 2006, 12:06pm   #55
 
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Quote:
Originally Posted by SIMA
First of all the 2 charts of on different timeframes, the left I guess 60min, the right on 5min.
The second one is actually a 3min chart.
Don't mean to give you a hard time on this, but I'm really seeing something else...


Quote:
Originally Posted by SIMA
POTENTIAL WEAKNESS APPEARS ON UPBARS ESPECIALLY IF THERE IS HIGH VOLUME
I would agree, but only if volume were extremely high.


Quote:
Originally Posted by SIMA
4. The Bozo in question is on the 28th of July, bring up a 120min chart and if you look left there is huge congestion zone between 5700-5750.
That's like looking back 5 weeks... does that supply area still hold then?


Quote:
Originally Posted by SIMA
If you drop down to say 30min or 15min bars from then on, you will notice lots of downbars on high vol, followed by markup in prices which culminate on narrow upbars on low volume (NO DEMAND) and also supply coming in at lower price levels,
What I'm seeing is are indeed a lot of down bars, but almost all of them succeed in closing in the middle or on top, that's a sign of strenght because it appears on downbars. then you have volume rising on some wide spread up bars. I agree in the end the narrowupbars but volume is always that calm near the end of DAX trading because it'll be 21-22 o' clock then...


Quote:
Originally Posted by SIMA
If you observe closely the retracement is on low vol (reduction in selling pressure, followed by a hammer on high vol, suggesting demand has entered the market, this is then followed by few bars up and further testing on downbars, however to observe this you will have to drop down to a 3min or 2min where these downbar testing low volume are clearly evident,

This chart is actually a 3min chart. Where do you see those signals then, I'm mostly seeing upbars with shadows on the upside equal or greater than the body, should that be a sign of weakness?
You're saying it's a retracement on low volume, but take a look at my first chart, volume is gradually dropping also so why isn't that a retracement?
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Old Aug 3, 2006, 1:42pm   #56
 
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Quote:
Originally Posted by firewalker99
In the previous post, you said you sometimes leave out the S/R lines when they're obvious.
Well perhaps they aren't so obvious to me, take this chart, why not draw a supply line now instead of a resistance like the purple one in the previous chart I mentioned.
You could. Either way, 5700 seems to be the number to beat. Back off to a two-year weekly chart.
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