Price, (Volume), Support, Resistance, Demand, Supply . . .

[SOCRATES]

There are too many variables involved to provide anything approaching a satisfactory answer. If, for example, the novice were literally complete, had nothing to unlearn, had no preconceptions, was able to work without investing his ego in it, was curious, was able to concentrate, was reasonably intelligent, then he would be able to get it far faster than someone who was or had the opposite.

But if you're asking in your heart of hearts how long it would will should ought to take you to "pick this up", that depends on how willing you are to focus on application rather than theory (since you registered more than two years ago, you very likely have had more than enough theory).

Some members tire of my continually encouraging newcomers to this subject to open journals. But there's only so much theory. This thread, for example, has over 700 posts (which is around 650 too many). The "theory" just isn't that complicated. When it seems so, the reason is more likely that whoever is trying to understand it is focusing on something else entirely (so and so says, or I read somewhere that, or I took this seminar once that, or this book said, or but the ADX says). Therefore, the sooner one begins looking at real charts, the sooner he is likely to "get it".

Db

This time I agree with you. Very good post. Very well explained.

 

[firewalker99]

There are too many variables involved to provide anything approaching a satisfactory answer. If, for example, the novice were literally complete, had nothing to unlearn, had no preconceptions, was able to work without investing his ego in it, was curious, was able to concentrate, was reasonably intelligent, then he would be able to get it far faster than someone who was or had the opposite.

Some members tire of my continually encouraging newcomers to this subject to open journals. But there's only so much theory. This thread, for example, has over 700 posts (which is around 650 too many). The "theory" just isn't that complicated. When it seems so, the reason is more likely that whoever is trying to understand it is focusing on something else entirely (so and so says, or I read somewhere that, or I took this seminar once that, or this book said, or but the ADX says). Therefore, the sooner one begins looking at real charts, the sooner he is likely to "get it".

Db

As for encouraging newcomers, I'm one of those that opened a journal because I've read a lot (perhaps too much) and think my skills won't improve unless I get a more practical approach, something tangible if you know what I mean.

Personally, I've drawn up my own strenghts and weaknesses to analyze where they influenced my trading. I haven't become a new person or acquired another personality but reminding myself of my weak points have stopped me from messing up any further. Whilst that doesn't mean I'm doing a good job at trading - because I'm not - but it hasn't worsened. Mainly I think I still have some "unlearning" to do.

 

[dbphoenix]

As for encouraging newcomers, I'm one of those that opened a journal because I've read a lot (perhaps too much) and think my skills won't improve unless I get a more practical approach, something tangible if you know what I mean.

Personally, I've drawn up my own strenghts and weaknesses to analyze where they influenced my trading. I haven't become a new person or acquired another personality but reminding myself of my weak points have stopped me from messing up any further. Whilst that doesn't mean I'm doing a good job at trading - because I'm not - but it hasn't worsened. Mainly I think I still have some "unlearning" to do.

Many traders ridicule the Velez book because he is so much a salesman of his website and services (pristine.com). And I don't want to invite any of that or get into it here. However, he does make some good suggestions for beginners, one of which is to write down every mistake that you make, keep track of those you tend to make fairly regularly, then rank then according to what the beginner considers to be the "worst" (probably those that lose the most money) to the least worst. Then the beginner is given the task of working on the problem that's at the top of the list. When it's under control, he goes on to the next one. And the next. One at a time.

Those who ridicule the book usually ridicule this idea as well. But many beginners -- and more experienced traders who find themselves in trouble -- find this exercise to be an excellent means of gaining, or regaining, focus.

Therefore, as I've suggested to you elsewhere, and as I suggest to anyone who's in the same position, write down all of this. And be specific. Any weakness, for example, should not just imply a solution but express it outright. For example, stating that one is "not disciplined enough" doesn't accomplish anything. What exactly prompted the beginner to write that down? And what exactly is he going to do about it (i.e., something more than just "do better")?

None of which has anything to do, really, with the subject of the thread, but it is related to Porks question. I've found that much of the difficulty people have with this relates to the extraneous and irrelevant questions they have floating around in their heads, like But what do I do about my MACD? It's nearly a form of tinnitus. And until the individual gets rid of it, he'll most likely just spin his wheels.

Db

 

[Porks]

Yes,

I'm still learning...

Thanks.

Porks

 

[ljyoung]

Db,
I am following up on your kind offer of last night:

Therefore, if you're interested in my views on distribution and topping mechanisms -- with or without volume -- bring it down to the application level and provide me with some chart examples.

and ask for any thoughts you may have on these 3 GOOG shots.

The lines in the 2 intraday charts represent:
Blue - old daily highs or lows
Red - most recent daily high or low
Black - most recent close and the open for the day
Green - close 2 days ago
Pink - a gap edge
The 2 ID charts have various combinations of these lines and please ignore the "angled" blue lines. The third chart is a naked P/V chart to provide context for the intradays.
TIA for your time.

 

[SIMA]

Db,
attached charts of Dax, 5min with trendlines and S/R levels, proved excellent trading tools today. The others are with traditional floor pivots.

there is a 15min chart, the downmove with bozos was accompanied on high vol, culminating in 2 dragonflies on relatively reduced vol , suggesting increase in buying pressure around 5610 level, this was followed by what might be termed as an accumulation phase with repeated testing on downbars on low vol indicating reduction in selling pressure.
Also of interest is the inflexion points on the way up today, the various pivot levels 5660, 5673 , 5680 are all Fibonacci retracement levels of the previous range (5715-5605), As lots of traders utilise this, including the floor pivot method, a belief system sets in and traders react at those levels which in turn culminate in those S/R levels ,

 

[dbphoenix]

Db,
I am following up on your kind offer of last night:

Therefore, if you're interested in my views on distribution and topping mechanisms -- with or without volume -- bring it down to the application level and provide me with some chart examples.

and ask for any thoughts you may have on these 3 GOOG shots.

The lines in the 2 intraday charts represent:
Blue - old daily highs or lows
Red - most recent daily high or low
Black - most recent close and the open for the day
Green - close 2 days ago
Pink - a gap edge
The 2 ID charts have various combinations of these lines and please ignore the "angled" blue lines. The third chart is a naked P/V chart to provide context for the intradays.
TIA for your time.

I seriously doubt that what I have to say is what you're looking for, but I don't want to ignore you, either.

First, way too many lines. You're dazzled by the trees. Let's look instead at the forest.

Note how the trading activity (wish I could abbreviate this as TA) increases when a new high is made at the end of June. Fine.

Now note how low the trdng act is at the next new high. Where are the sellers? Was all of that activity during the previous high the beginning of distribution? Not necessarily. Price can continue for longer than you'd believe on very little trdng act at all. When it gets to the point where sellers' interest is renewed, they'll jump in. Until then, price will rise as long as somebody is willing to pay the ask.

Now you get a big clunk that settles at the last swing high. The fact that it doesn't drop farther is good. However, note that the trdng act on the next push is no better than it was during that clunk. Not only that, but price can't make any further progress. In fact, it consolidates at that last swing high. Further distribution?

Now look at the trdng act on the next push. Pitiful. A reason to exit? Up to you. You may want to wait for the reversal, if there is one. But at least you have a couple of important lines in the sand: the demand line and the last swing low. If price violates both, it's time to lighten up or get out.

Price does not, however, violate both. Instead it finds S at the last swing low (the blue line). It does violate the LSL on the next attempt, but quickly shoots back up above that line, confirming its importance, if not its strength. And if you exited, you may feel like a chump.

But rather than beat yourself up or jump back in impulsively, watch what happens when a new high is attempted. Trdng act is not remarkable, no higher than it was on the way down. And there is no new high. That makes the red dot your short entry. Or one of them. Again, this depends on your strategy and tactics.

Then you fall fall fall to 78, at which point you rally. This gives you tentative support (there are others along the way, but I'm trying to cut to the chase). This is tested again without violating the supply line. When the supply line IS violated, the last swing high is not exceeded, or even reached. Therefore, when you break 78, you still have your downtrend intact and a more important S/R level to look at.

THEREFORE (finally), whatever you do intraday is rooted in what happened at 78. If you didn't short at 78 or soon thereafter, then you are more likely to be pulled and pushed and banged around. Even 78, of course, is far too late, but maybe you weren't trading GOOG when it topped out.

As far as distribution goes, however, all that is history. From that point forward, it becomes a matter of S/R and "trend", if that's what your strategy is based on (if your strategy is based on something else, then S/R and trend may not matter). If Tuesday is the day it dropped below 78, then you have to decide how tight your stop is going to be, what your target is going to be, whether you're going to scale in or out or both and how. But "distribution" is not going to be of much help to you. And volume may not be of much help either, if any.

Db

 

[dbphoenix]

Db,
attached charts of Dax, 5min with trendlines and S/R levels, proved excellent trading tools today. The others are with traditional floor pivots.

Sorry, I don't open files. Could you save these as images?

Db

 

[dbphoenix]

Just for grins, a hinge:

 

[ljyoung]

Db,

Many thanks for your thoughtful response and as mentioned before, I am most definitely interested in what you have to say. I see your trend lines are of the Sperandeo variant, which is what I use.

Let me reflect on your interpretations and get back later today or tomorrow.

BTW, poor GOOG is getting trashed today, heading ever closer to a retest of the upper edge of a nasty unfilled gap, on the daily @ 360-361. A quickie: Does your protocol suggest whether or not GOOG will fail to hold this time? Just curious. I am NOT of the crystal ball school of technical analysis - with pragmatic anticipation, one deals with what the market gives you. And indeed a hinge with further breakdown today to give a 365 low and a 367 close.

Again, thanks,

ljy

 

[dbphoenix]

A quickie: Does your protocol suggest whether or not GOOG will fail to hold this time?

I stopped bothering to predict the future long ago. My focus is on what I'd do if I were in, or what I'd do if I weren't and wanted to be. If I were in, I'd keep an eye on 360 and 330 (from the hinge chart I posted; I'm not concerned about gaps, as a rule), but this is assuming that I shorted when I was supposed to. If I didn't, I'd be too quickly flipped back and forth between profit and loss -- assuming I ever made the profit column at all -- and thus easily shaken out (the "weak hand" you hear so much about).

Db

 

[firewalker99]

Sorry, I don't open files. Could you save these as images?

Db

Apparently he had some problems posting images?
anyway, as I'm much interested in his charts as a fellow DAX trader, I attached the charts included in his Word document.

 

[ljyoung]

Db,
- a "be here now" trader, which is the only kind of trader to be. I on the other hand, like the Japanese traders, am fascinated with gaps because of their potential to be magnets for price and/or "resting points" on the road to wherever. But one must be patient to be able to avail oneself of their uitlity. It is quite true that apparently, some gaps are never filled. It is rare that when price is near a gap that price is not affected by the gap, however one wishes to define "affected". My eyes are also on 360 because if it is violated in a meaningful way, the next important stop, is, as you have noted, the gap edge at 330. Perhaps some interesting combination of NFP numbers and FOMC action will force the issue.
ljy

 

[dbphoenix]

Apparently he had some problems posting images?
anyway, as I'm much interested in his charts as a fellow DAX trader, I attached the charts included in his Word document.

Unfortunately, I have no idea what any of these lines mean. This thread isn't about Fib and pivots, but perhaps someone would like to address the S/R in these charts (i.e., not the Fib or pivots).

Db

 

[dbphoenix]

Db,
- a "be here now" trader, which is the only kind of trader to be. I on the other hand, like the Japanese traders, am fascinated with gaps because of their potential to be magnets for price and/or "resting points" on the road to wherever.

I investigated these at one time but didn't find anything that would yield a high-probability entry, contrary to what I'd read. This may depend on the particular stock or option or other trading instrument, but I'll leave that to others.

There is something to be said for a breakaway gap, but this has more to do with S/R than with the gap itself.

Db

 

[millsy500]

Db,

Many thanks for your thoughtful response and as mentioned before, I am most definitely interested in what you have to say. I see your trend lines are of the Sperandeo variant, which is what I use.

Let me reflect on your interpretations and get back later today or tomorrow.

BTW, poor GOOG is getting trashed today, heading ever closer to a retest of the upper edge of a nasty unfilled gap, on the daily @ 360-361. A quickie: Does your protocol suggest whether or not GOOG will fail to hold this time? Just curious. I am NOT of the crystal ball school of technical analysis - with pragmatic anticipation, one deals with what the market gives you. And indeed a hinge with further breakdown today to give a 365 low and a 367 close.

Again, thanks,

ljy

Theres been a shed load of insider selling on goog. I would'nt be too eager to trade that baby

 

[SIMA]

Quote:
Originally Posted by firewalker99
Apparently he had some problems posting images?
anyway, as I'm much interested in his charts as a fellow DAX trader, I attached the charts included in his Word document.


Unfortunately, I have no idea what any of these lines mean. This thread isn't about Fib and pivots, but perhaps someone would like to address the S/R in these charts (i.e., not the Fib or pivots).

Db


Had difficulty posting these, so passed it on a friend who sought Firewalkers help, thanks Firewalker
1. If you look closely, the charts are all based on your Support/Resistance level and Trendline concepts
2. I have just mentioned fib levels to highlight the fact these price levels coincide with those S/R levels as lots of traders employ fib calculations in their trading and if enough people believe in that, then prices tend to react at those price levels, which then manifest as your Support/Resistance levels.
3. Same happens on the chart which illustrates the use of Daily Pivot levels (based on previous day's high, low and close) and are used by numerous traders.

4. The 15min chart illustrates the concept of accumulation , with the initial decline on heavy volume, followed by repeated testing of the low 5610 on light volume , indicating or suggesting reduction in selling pressure, followed by a rapid mark up or price move,

Any comments or clarification would be greatly appreciated

 

[firewalker99]

The 15min chart illustrates the concept of accumulation , with the initial decline on heavy volume, followed by repeated testing of the low 5610 on light volume , indicating or suggesting reduction in selling pressure, followed by a rapid mark up or price move,

If your chart is an illustration of accumulation, then I'd like to have your reaction on the following chart, don't mean to interrupt your chart analysis, but like to give an example of the contrary where I fail again.

-> after a double top formed on lower volume (SOW), it breaks down with increasing volume
-> the down move goes way back to 5655 and then you have seral up bars with large wicks for me these or signals of strength, not?
-> up bars are wider spread and on noticeable higher volume than the down bars
-> little zone near the end, expecting a rapid markup not?

Tell me if you agree with these signals and have a look at the chart to see what happened.
Then tell me where I got it all wrong this time...

 

[SIMA]

Db,
By the way let me clarify that my take on fib. levels, pivots ,S/R etc are just observations, not meant as arguments , in fact it is more in the spirit of compliment for your excellent explanations of S/R levels, trendlines, Price/Volume (buying and selling pressure), Strategies (reversal, retracement, breakout)

Infact in many respects your observations and explanations of the pulse of the market is very lucid and logical compared to say lots of comments regarding VSA principles where people keep harping on about supply (as if there is an inventory), selling /buying volume, professional activity and manipulation. This you are right is irrelevant and just sidetracks the trader, infact injects paranoia, conjuring up images of boys in dark glasses lurking or huddled together in smokefilled rooms, ready to pounce.

1. As for my take on the S/R levels, I realised that they do not materialise from thin air, traders reacted previously and do so on a continuous basis,at certain price levels as majority utilise Fib. Retracement and Projection levels, Floor Pivots, Gann intersections and so on.

2. These in turn manifest as Support/Resistance, which you emphasise and focus on and once again is the most logical , very much in keeping with say focusing on price (buyers and sellers) on a chart rather than trying to garner all the information regarding price movement from fundamentals.

3. There is also the aspect of Trends and Trendlines, most in VSA circles ascribe demand and supply i.e support and resistance to these lines, however your observation negates this completely, the support and resistance originates from price levels not from the sloping trendlines.
4. However VSA principles do have their merit, especially after significant Signof Strength or Weakness which is followed by various kinds of testing (Upthrusts, Shakeouts, 2bar reversals, no supply, no demand etc) against important Support and Resistance levels.

One of the charts illustrates this Dax 15min, perhaps you have some comments on that.
Have also provided my own take on the BOZO issue on Firewall's journal as I trade Dax as well, the other being EminiS&P and Dow.

 

[millsy500]

hi fire walker

on your chart i see a bear flag. likely down. break above 5662.5 strength below 5652.5 weakness and sell signal