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

[firewalker99]

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

and what bear flag do you see actually? could you give me some details as to why you think it's more likely to go down? I'd appreciate any insight. How about my volume lines that indicate retracement on low vol, so expecting an up move after selling climax?

 

[dbphoenix]

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

1. Mine? Only partly.
2. If one draws enough lines, they will overlap somewhere. But this carries no implications with regard to S/R.
3. Whether they are used by numerous traders or not does not necessarily carry any implications for S/R.

But regardless of how many lines one draws or where he draws them, it's all just an exercise unless it leads to a trading plan. If you post your trading plan, I'll be able to determine whether any or all of these lines are important to it or not.

As to the images, just copy them to Paint and save them as jpg. They will then be easy to upload to the site.

Db

 

[ljyoung]

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

Too right. The insiders have been busy and one wonders where it all will end. The daily volume since the ride down began in early July has, except for the earnings day blip, been largely contained by the EMA30. My guess is they are looking for a bottom but at what level - 360, 330 or 300, I don't know. In recent days V has turned up again so perhaps a denoument approacheth. Again I don't know when.
ljy

 

[dbphoenix]

Db,


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.

However, I've seen no evidence from price charts that any of this is true.

One of the charts illustrates this Dax 15min, perhaps you have some comments on that.

I don't know which chart is the 15m chart.

Db

 

[SIMA]

I don't know which chart is the 15m chart.

Db[/QUOTE]

1. ATTACHED 15MIN CHART -

2. 5min chart with S/R levels and Trendlines,


Trading Plan was simple, to take the cue from 60min, then from 15min which I saw as accumulation phase, (have explained my take on a previous post), perhaps you have some comments on that
Next Day only focussed on going long above support levels with the trend, proved successful, that is all that matters

 

[dbphoenix]

1. ATTACHED 15MIN CHART -

2. 5min chart with S/R levels and Trendlines,


Trading Plan was simple, to take the cue from 60min, then from 15min which I saw as accumulation phase, (have explained my take on a previous post), perhaps you have some comments on that
Next Day only focussed on going long above support levels with the trend, proved successful, that is all that matters

I don't know what the 60m chart looks like, but the 15m chart is enough for now. Can you explain what you mean by "take the cue"? What was your plan prior to the open on Aug 2?

Db

 

[SIMA]

I don't know what the 60m chart looks like, but the 15m chart is enough for now. Can you explain what you mean by "take the cue"? What was your plan prior to the open on Aug 2?

Db

1. There is huge congestion zone around 5600 , spanning over 3 days (24-26th July), the market then breaks to the upside , heads toward 5750, where it is looking at another huge congestion going back 30thJune to 12th July, that is where you pointed that great shorting opportunity following that upside BOZO on huge vol. on the 28th July.
2. Well that short trade culminated in another down BOZO on high vol around 5600, Now I have learnt from a Floor Trader, observed in real time, traded with it, and believe it that when volume rises, it is evidence of resistance to the prevailing trend. When we see these peaks in volume, we never know whether the market will go up or down, it all depends on the strength of the buying and selling forces at the time.
3. I adopted the floor traders bias towards taking a position counter to the prevailing trend which came from his experience of the market to my advantage to focus on long trades the following day. His logic for the countertrend bias was:
a. Markets spend more time going back and forth than travelling in straight lines.
b. The longer and further a market has been moving in one direction, the more likely it to reverse. IT IS VERY SIMPLE, BUT GROUNDED, THIS IS THEN CONFIRMED BY ADDITIONS OF BAR FORMATION AND VOLUME .

4. The supporting evidence was all there, congestion zone at 5600, heavy vol down BOZO followed by various tests of supply, call it accumulation, whatever , does not matter, the important point was the selling pressure was decreasing and the buyers were gaining an upper hand, clearly exhibited with a strong gap up on the 2nd, now it only remains for me is to focus totally on the long trades with the S/R levels and the Trendlines the way you place them.


By the way who or on what basis somebody has stuck a rookie label against my name)))

 

[firewalker99]

By the way who or on what basis somebody has stuck a rookie label against my name)))

That's based on the number of your posts
Untill a week ago I was a newbie
now I'm a member but in my trading efforst I feel I've put a step backward instead of forward

 

[ljyoung]

Db,

Many thanks for your macro-AUC comments on the GOOG. They are definitely useful to me. And lo, after bouncing from 363, price has marched up to encounter resistance at 377 or so (from 1P till now, 3:30 P).

The more I read of what you and others have to say on this thread, the more I appreciate what I do not know. Which is not to say that I know nothing but rather that these discussions are helping me to put my notions about price and volume into a more meaningful, workable trading methodology.

In one of your earlier posts you state that these days it is the market which is the "operator". This, as opposed to earlier days when pools and such ran the show. I do not agree with you. As Stalin once said, "Quantity has a quality all of its own". The shear magnitude of the holdings of the major players (call them whatever you want) makes what the small players do almost irrelevant in terms of how price moves in the market. This is not paranoia or conspiracy theory but rather it is just the business of trading money. As you and others have mentioned "perceived value" is what is of consequence.

So what is real and what is contrived in terms of what we see on a chart? The longer the time frame the better able we can see what is going on. You seem to intimate that it doesn't matter who's doing what but rather what has happened which is the thing of consequence. The notion that volume represents trading activity (?TrAc or TRAC) is spot on and gets around much of the flotsam and jetsam that float about us. It is still useful, I believe, to question the origins of a print. Whether or not one has the unique answer to what is going on, is probably never going to be known with any great degree of certainty. What matters is whether or not one's working hypothesis can stand the test of time. The stock market is one of the very few scenarios where you really can accumulate evidence concerning the viability of your hypothesis - which is to say you can make money (or lose it if you're wrong).

Anyone, I would submit, who is involved with the market is trying to predict the future. It depends on how one does it. That is the essence of a valid working hypothesis. Anything else is the randomness of chance and eventually the player who can't tell the difference will blow up. I am trying to learn how best to avoid chance encounters and fortuitous cancellations of incorrect perceptions.

The utility of VSA rests on the following theorem:
If big money is controlling this game then how can one make use of the fact that because of the large TRAC associated with their involvement in the market, they leave a reproducible and detectable spoor. Like the wiley whatever, they will try and deceive the ignorant lumpen. That's what algorithmic trading has been constructed for - to hide the trail of size.

I've probably said more than I should (given my level of ignorance) but with any luck the tender mercies of yourself and the rest of the thread (I do not mean this in a sarcastic or petty way in the least) will tolerate the rant. With any luck my notion will be shredded with cold, hard, testable logic only to be born again as a new hypothesis. Science is always iterative and if we wish to apply scientific priciples to the stock market, then we should expect to be iterated (ho, ho, ho as dear Hunter S. Thompson might have said).

ljey

PS: Its 3:36 and 378 has been approached.

 

[SIMA]

I don't know what the 60m chart looks like, but the 15m chart is enough for now. Can you explain what you mean by "take the cue"? What was your plan prior to the open on Aug 2?

Db

Once again the same scenario today in the afternoon

1. Prices drop to 5610 this morning on high vol and then form lower lows
2. the first Dax 5 has the S/R LEVELS AND TRENDLINES
3. the second has Daily Pivots, realise you do not use it, however I find them useful, having observed the price reactions at various levels for the past 6yrs
4. The US markets were in an uptrend
5. Clear signals at support levels

What more does one have to look for and equivocate about

 

[firewalker99]

If you don't, you can wait for the retracement (RET), which is where I've placed the second red dot. RETs disturb many novice traders because they think they screwed up. They want to reach their target as quickly as possible. If they don't, they think they're in trouble. So they cut their profits short. But rather than descend into flop sweat fear, focus on what a RET represents to those who didn't buy the BO. This is their second chance.
Db

You mentioned I'd leave out volume from my charts.
Today I was reading over your analysis of a chart (on which you indicated red dots for possible entry points). This was a very clear analysis, although near the end you say "I didn't mention anything about volume yet". Near the beginning you mention a retracement. Now I'm wondering how to distinguish a retracement from a reversal. For this I'd have to look at volume? Unless the bar spread suddenly changed and price movement was very slow... and even then I would be in doubt...

 

[dbphoenix]

You mentioned I'd leave out volume from my charts.
Today I was reading over your analysis of a chart (on which you indicated red dots for possible entry points). This was a very clear analysis, although near the end you say "I didn't mention anything about volume yet". Near the beginning you mention a retracement. Now I'm wondering how to distinguish a retracement from a reversal. For this I'd have to look at volume? Unless the bar spread suddenly changed and price movement was very slow... and even then I would be in doubt...

Distinguishing between a retracement and reversal has been a burr under the saddle of many a trader. Fact is, you don't always know until you're in the middle of it.

You will likely learn to disguish between the two in the testing you do in preparation for your trading. But you needn't be able to make that distinction in order to begin. Which takes us back to your journal

Db

 

[dbphoenix]

1. There is huge congestion zone around 5600 , spanning over 3 days (24-26th July), the market then breaks to the upside , heads toward 5750, where it is looking at another huge congestion going back 30thJune to 12th July, that is where you pointed that great shorting opportunity following that upside BOZO on huge vol. on the 28th July.
2. Well that short trade culminated in another down BOZO on high vol around 5600, Now I have learnt from a Floor Trader, observed in real time, traded with it, and believe it that when volume rises, it is evidence of resistance to the prevailing trend. When we see these peaks in volume, we never know whether the market will go up or down, it all depends on the strength of the buying and selling forces at the time.
3. I adopted the floor traders bias towards taking a position counter to the prevailing trend which came from his experience of the market to my advantage to focus on long trades the following day. His logic for the countertrend bias was:
a. Markets spend more time going back and forth than travelling in straight lines.
b. The longer and further a market has been moving in one direction, the more likely it to reverse. IT IS VERY SIMPLE, BUT GROUNDED, THIS IS THEN CONFIRMED BY ADDITIONS OF BAR FORMATION AND VOLUME .

4. The supporting evidence was all there, congestion zone at 5600, heavy vol down BOZO followed by various tests of supply, call it accumulation, whatever , does not matter, the important point was the selling pressure was decreasing and the buyers were gaining an upper hand, clearly exhibited with a strong gap up on the 2nd, now it only remains for me is to focus totally on the long trades with the S/R levels and the Trendlines the way you place them.

Sorry, but this still doesn't tell me what your plan was prior to the open for Aug 2.

Db

 

[SOCRATES]

...A fascinating ongoing discussion...very very interesting indeed.

 

[millsy500]

and what bear flag do you see actually? could you give me some details as to why you think it's more likely to go down? I'd appreciate any insight. How about my volume lines that indicate retracement on low vol, so expecting an up move after selling climax?

fire walker

try getting familiar with chart patterns first, forget about volume and analyising each single bar. one step at a time dude.

 

[firewalker99]

fire walker

try getting familiar with chart patterns first, forget about volume and analyising each single bar. one step at a time dude.

I know people are saying look at the big picture, look at the forest instead of the trees.
But the books I've read (amongst others) from Tom Williams - VSA all really point out one specific bar (on any time frame, even 3 or 5 minutes) and than give some meaning to it. Let me give you an example of how I put VSA in practice and seem to get it all wrong three to four times.

Yes, I know with the chart included (Russell 2000, intraday 3 minute of August 3) it's an uptrend. Well then if I should not short, where should I go long then? Each point you'd indicate would mean going long at the high, don't they say "sell high, buy low"... instead by going long I'd by buying at an increasingly higher level...

 

[SIMA]

I know people are saying look at the big picture, look at the forest instead of the trees.
But the books I've read (amongst others) from Tom Williams - VSA all really point out one specific bar (on any time frame, even 3 or 5 minutes) and than give some meaning to it. Let me give you an example of how I put VSA in practice and seem to get it all wrong three to four times.

Yes, I know with the chart included (Russell 2000, intraday 3 minute of August 3) it's an uptrend. Well then if I should not short, where should I go long then? Each point you'd indicate would mean going long at the high, don't they say "sell high, buy low"... instead by going long I'd by buying at an increasingly higher level...

Having read some of the comments of DB on your Journal, I am afraid he is spot ont, looks like you are having the same problem as most have in the initial stages of their trading career,
namely a Kitchen Sink Approach, trying to combine everything, S/R, Trendlines, VSA, Point and figure, Market Profile, Gann, Fib levels, etc, having gone through that experience all I can say is one end's up like a dog chasing his tail.

1. Came across Candlestick charting during my stockmarket days in 1993, thought I had found the treasure to forecast every twist and turn in the market with those Hammers, Dragonflies, Shooting stars, Gravestone Doji, Engulfing bars etc Took a long time to learn that these have to be considered within the context of the Price action and not in isolation.Bet majority have gone down that route. Steve Nisson has made a career out of it, if he had unearthed some secrets allowing vision into the future, he would now own a few Islands in the Pacific and surpass Bill Gates in wealth

2. When I landed on to VSA in 1999, initially made the same mistake, reading into every bar , that is what is happening to you at present, Just reading a book and trying to understand in totality the underlying pulse of the market is a futile endeavour, it has taken nearly 5yrs to gain more insight into VSA concepts, so give yourself time, you are on the right track

3. Think Db's suggestions are the best you will ever get, his strategies revolving around S/R and Trendlines are the most logical presented and explained with lucidity I have not found on any of the Journal or threads, would be nice if now and then he showed examples of his own SWING (Golf jargon) )
keep it simple, focus only on a couple of time frames, 60min, 5min, mark those imp. S/R levels,
As I mentioned previously establish the trend on the longer time frame first. then you can trend with it on the smaller time frame, also keeping in mind that a Retracement on 60min chart can exhibit itself as a Trend Reversal on the 5min chart with its own series of retracements.

Hope this helps

 

[firewalker99]

Having read some of the comments of DB on your Journal, I am afraid he is spot ont, looks like you are having the same problem as most have in the initial stages of their trading career,
namely a Kitchen Sink Approach, trying to combine everything, S/R, Trendlines, VSA, Point and figure, Market Profile, Gann, Fib levels, etc, having gone through that experience all I can say is one end's up like a dog chasing his tail.

Both dbphoenix and you are right. I've read Steve Nison, Wyckoff, Tom Williams, and some others also. I've tried to process all this information and perhaps one of my strenghts has turned out to be of weakness, the ability to process and study data. If I'd didn't have such a good memory I wouldn't be remembering all that stuff. Perhaps I need to clear my mind and start all over again, but I'm not sure where to go as which instrument to use... If you have the time, take a look at my attempts of today to clear my charts up and leave only S/R on it.

 

[dbphoenix]

Having read some of the comments of DB on your Journal, I am afraid he is spot ont, looks like you are having the same problem as most have in the initial stages of their trading career,
namely a Kitchen Sink Approach, trying to combine everything, S/R, Trendlines, VSA, Point and figure, Market Profile, Gann, Fib levels, etc, having gone through that experience all I can say is one end's up like a dog chasing his tail.

1. Came across Candlestick charting during my stockmarket days in 1993, thought I had found the treasure to forecast every twist and turn in the market with those Hammers, Dragonflies, Shooting stars, Gravestone Doji, Engulfing bars etc Took a long time to learn that these have to be considered within the context of the Price action and not in isolation.Bet majority have gone down that route. Steve Nisson has made a career out of it, if he had unearthed some secrets allowing vision into the future, he would now own a few Islands in the Pacific and surpass Bill Gates in wealth

2. When I landed on to VSA in 1999, initially made the same mistake, reading into every bar , that is what is happening to you at present, Just reading a book and trying to understand in totality the underlying pulse of the market is a futile endeavour, it has taken nearly 5yrs to gain more insight into VSA concepts, so give yourself time, you are on the right track

3. Think Db's suggestions are the best you will ever get, his strategies revolving around S/R and Trendlines are the most logical presented and explained with lucidity I have not found on any of the Journal or threads, would be nice if now and then he showed examples of his own SWING (Golf jargon) )
keep it simple, focus only on a couple of time frames, 60min, 5min, mark those imp. S/R levels,
As I mentioned previously establish the trend on the longer time frame first. then you can trend with it on the smaller time frame, also keeping in mind that a Retracement on 60min chart can exhibit itself as a Trend Reversal on the 5min chart with its own series of retracements.

Hope this helps

Someone asked recently how long it takes. Well, it seems reasonable to assume that the more material one studies, the longer it will take to assimilate all of that into something he's happy with. Additionally, the longer one avoids studying the market, i.e., trader behavior as manifested in the movement of price, the longer he will be vulnerable to the Grass Is Greener syndrome, flitting from Elder to Murphy to Darvas to Elliott to whomever. Eventually, some people realize that all the gurus are saying essentially the same thing and get down to the real work of developing something of their own that makes money. Most don't (see my Stages thread). I sometimes think that those newcomers who are lucky enough to be taught one simple, profitable method are blessed.

As for my trading, I've explained that several times, but to no one's satisfaction. The S/R thread provides several examples of what I use. Maybe it's too simple. In any case, my telling fw to trade the way I do would be just one more layer, and he's not that far away from being crushed by the weight of all this. His task is not to add but to subtract.

Db

 

[dbphoenix]

For those who are interested in hinges, here's another. I left all the preliminary lines I drew rather than clean it up:

Other examples:

http://www.trade2win.com/boards/showpost.php?p=120598&postcount=44

http://www.trade2win.com/boards/showpost.php?p=214544&postcount=31