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

[skinstg]

I will have another bash at area 4 in DB's post #491 - hopefully a more concise one...

The last week in April volume dips, buyers & sellers remain evenly matched, however in the next week sellers overwhelm buyers on slightly increased volume, price closes very near the low, however we are heading into potential support area now, illustarted by DB's horizontal lines in the post.
The second week in May, price opens even lower, however buyers come in during the day, volume picks up, and prices rise, closing slightly off the high indicating potential weakness.
One point to note here is that in the decline to support volume has not been as high as the volume in the big bozo down first week of April, suggesting sellers may be drying up (or buyers potentially, however looking at price action at the support level would indicate that sellers were the ones running out of steam)
The last bar is a nice strong bozo up on less volume, indicating that selling is done.
2 more points to watch here
1 - If we had drawn in a supply line this line would be broken to the upside, indicating potential trend change.
2 - 42 is a potential resistance area ( was where the last swing high formed), need to watch what market participants do here.

Let me know if i am completely off target, thx

 

[dbphoenix]

Very nice, esp the following:

One point to note here is that in the decline to support volume has not been as high as the volume in the big bozo down first week of April, suggesting sellers may be drying up (or buyers potentially, however looking at price action at the support level would indicate that sellers were the ones running out of steam)

I was hoping somebody would get that, since it's much the same principle as I've been trying to get across in the charts I posted from April (post 438ff [now 368ff]).

 

[dbphoenix]

Eventually, this becomes almost a drill. The principles are what they are, and applying them becomes almost automatic.

1. As an important test approaches, trading activity increases. Buying pressure wins the day (effort), as can be seen by the relationship of the high to low in the bars (result).

2. Trading activity here is far less than at "1", and $ makes a HrL, suggesting that sellers aren't interested in pushing $ lower (if they were, trading activity would be higher). As it is, buyers are able to retard and reverse the decline with little effort. However, they are not able to do much more than make a new swing high.

3. The third time is supposedly the charm in some circles, and S is supposed to break, but buyers have other ideas. Loads of trading activity and an almost climactic selloff, but $ ends up off the low and can be propelled back to the swing high with almost no effort at all.

4 & 5. Trading activity tapers off as $ reaches R. This is not necessarily a bad thing. $ may be preparing for an advance. But trading activity increases on the way down to test S, and buyers lose their resolve when the time comes to fish or cut bait. $ fails to break through, telling sellers that their time may have come.

6. . . . ?

 

[porgie]

s/r

db,

YM ....intraday trading only.......I prefer the 5 minute chart as it gives earlier picture....10 is smoother 15 , etc....If P/V....S/R..etc. is understood correctly, should the time frame be relevant, or am I just looking for crutches as usual? by the way, the 5 minute YM chart P/V ..S/R was more than interesting yesterday. P/V..S/R ...S/D ...and the rest of what you are conveying is beginning to get clearer for me. ..Thanks very much

 

[porgie]

#6

After the Supply line break to the upside, my buy signal would have been @ 28 retracement @ demand line. I would be @ breakeven now...If I missed that entry...As for reading the chart currently for entry, with the strong resistance range being approached, and the sharply declining volume, it appears that I need to cut bait..........

 

[dbphoenix]

You're still focusing on strategy and tactics and trade management rather than on the dynamics of the chart. Focus on what's happened and happening in the chart, not on what you might/can do about it.

Your responses suggest that you're reading the chart from right to left rather than left to right. Gavin is learning to read it from left to right. Review his posts.

 

[porgie]

comment

db,

4 years and thousands of hours of being ignorant won't be erased overnight.Not a waste, just kind of sad... I have "chart hopped" as I call it, until it became a bad habit. I believe it is correctly labeled "curve fitting"? Always looking for the chart that fits the day, and system that does the same..I currently have one screen so space is limited for now...I plan to change that....I have developed many systems..ES/NQ/YM ..only one is excellent and it is based on same as your teaching and I didn't realize it until I stripped the junk off of it and realized I only need simplest chart as you present. ...I.appreciate your pointing out the difficulty of making changes toward fresh thinking....Thank You

 

[dbphoenix]

I have only one screen, too. It's not a problem. I suggest you study the Practicum further, particularly from p 25 to the end.

 

[porgie]

yesterday swing low

db,

Yesterday's swing low? @ 10450 YM held this morning on double test on higher volume. Rest of day has been h/h's h/l's...demand line is very strong with volume tapering off steadily as price is now in yesterday's and today's resistance range...are these observations relevant? Please excuse if I am a pain...Thank You

 

[skinstg]

I'll have another go at area 6 from DB's post #503, practice makes perfect...

After $ has moved in the tight range from Nov to Feb, Selling pressure dominates in the first week of Marchand price breaks below support on high volume. This breakout is followed through on the next bar on even higher volume, forming a nice bozo down ( appears that buyers who were long anticipating the upside breakout are throwing in the towel here).
Downside momentum is retarded over the next 4 bars, volume decreases, as we approach potential support.
Price rises on what has become average volume, and the last week in April buyers & sellers come in again in size, however niether side is dominant and price forms a nice doji.
Of note at this point is that $ has formed a higher low than the lows in areas 1/2/3 - yet to be seen if this holds, & we geta higher low after this.
After this doji, selling pressure dominates, however price closes off the lows, next bar buying dominates (if we smoosh the 2 bars together we have a nice hammer)
In the last 2 bars $ price rises nicely on low volume - are sellers done? - we shall see what the reaction is as when we get to potential resistance, which is not too far ahead.
All of this occurs in what has become a nicely defined range between 27 and 30.5

 

[dbphoenix]

Again, very nice. Any suggestions on why I put a question mark after "Tst"?

 

[DTK]

Here's my suggestion / stab in the dark.
Is it because the support that it is testing is from 5 months ago and getting a little old?
From what I can make out, it also looks like a LrH formed after the "Tst" just previous to the "Tst?" and quite a lot of volume on the follow through.

Again, very nice. Any suggestions on why I put a question mark after "Tst"?

 

[skinstg]

Is it because $ never really gets down low enough to properly test support, but finds support at a higher level, thereby making a higher low (compared to the low in October)? Thats the only thing I can think of.

 

[dbphoenix]

Almost.

If S/R is an essential -- or at least important -- component of the tactics, then trading it in real time can present certain challenges. One of the more important advantages of trading S/R is that most of the planning can be done in advance. However, S/R can sometimes present itself in unexpected places, sometimes because one just didn't see it, and sometimes because no one did.

In this case, one could reasonably expect a test of 27. But S was found at the body lows of the last swing low instead, and holding stubbornly to a conviction that $ would reach 27 despite the unfolding reality of the situation would mean missing the best opportunity to enter. Trading in real time means being alert to what to you are unexpected reversals and incorporating them into one's contingency plans rather than be intimidated by them.

 

[dbphoenix]

Incidentally, winners and losers each exhibit certain behaviors. Making the effort is characteristic of a winner (though not the only one).

 

[dbphoenix]

1. and 2. What may be a familiar pattern by now: potentially (at the time) climactic volume on the downside, lighter activity on the test resulting in a HrL.

3. Another HrL, but no test of anything in particular (characteristic of a retracement). If one is relaxed, a small bell might ring when higher volume (an increase in trading activity) is unable to drive $ lower than 26.5. Even though some might consider the so-called "candle pattern" to be bearish, this inability of sellers to drive $ lower is just the opposite, what I call The Dog That Didn't Bark (Brits will know why ). The rebound is aggressive, and, by now, the fact that trading activity is substantially less should not discombobulate anyone who is viewing this as a movie rather than as a slideshow.

4. and 5. The angle of ascent tapers dramatically, and if you've been through the whole indicator thing, you know without looking at them that the slosto will be "overbought", the MACD histogram will show a "divergence", and the MACD itself is crossing or is about to. But you don't have to look at them to know this. The dog wags the tail after all. Trading activity is higher on the test that results in the DT, but it's lower than the activity on the dip, which is not good, not because the activity is lower per se, but because the result of the effort is unsatisfactory.

6., 7., 8 . . . ?

 

[erierambler]

Nice examples Db for beginners to learn. If I may interject here with regards to a previous example in post #484, basic materials.(now post #386)
3- volume is a sign of an excited market, price droopping to the right of the high (in Feb) is a sign of technical weakness. Do you agree?

erie

 

[dbphoenix]

It seems simple, but I don't know what you mean by "technically" or by "weak". What one sees here depends on whether he's reading the chart from right to left or left to right. If reading it from left to right, there's nothing "weak" about a decline, particularly if the trend is up and the trading activity declines. The true weakness is shown the last week of April, before the bozo.

 

[erierambler]

It seems simple, but I don't know what you mean by "technically" or by "weak". What one sees here depends on whether he's reading the chart from right to left or left to right. If reading it from left to right, there's nothing "weak" about a decline, particularly if the trend is up and the trading activity declines. The true weakness is shown the last week of April, before the bozo.

The technical weakness regarding price falling below the last swing low , coupled with high volume. Yes trading activity does decline after that . That's exactly it.

erie

 

[porgie]

tools

db,

I am reading journal posts and will be current soon. I must say my testing is so interesting....Price/Volume/D-S lines/S-R/now including climax volume bars in test......I am scratching the surface...No ego left here, only desire to learn....I must admit the10 minute chart is easier for me @ this time...intraday YM...What motivates you to be so generous? You give a lot and sometimes it is not appreciated.....Thanks Again...