Sudden accelerations on Dax

The Snip€r

Junior member
23 0
Hey dear !

Very interesting your graph as i spot another "acceleration" this morning as well...i m not sure how to explain !?... https://ibb.co/D98qCtV

In few words, what makes you think this spike on your graph will stay a demand trap and not becoming a break out which will get higher please ?

(Btw your graph are cfd or futures graph ?)
 

Bloodhound

Senior member
3,445 1,299
OK - that's a tougher one and not one I would have looked to trade as it's getting in mid way through a move which is too late for me. The lower low I have marked on this chart would have been tradeable for me although it's not currently a 'style' of trading that I use as I prefer to look for other things, like traps. Without going into huge amounts of detail at this stage it's quite hard to explain without a solid grounding in the basic concepts of supply and demand and how they are represented on a chart.

20190715daxt2a.png


The reason that the spike on my previous chart stopped where it did was because price had hit a zone of supply / pocket of orders where sellers were likely to come in. What I (and others) would refer to as a supply zone. The combination of price breaking out through that swing high, then hitting the supply zone, traps buyers on the wrong side of the market.
 

Bloodhound

Senior member
3,445 1,299
Not wanting to confuse you regarding traps I just thought I'd give you a flavour of how they can be used in a more 'advanced' scenario. Full disclosure that I missed this trade as my alert didn't get hit so I was late to the party. There is quite a lot going on here from a price action point of view but in a nutshell:

Shorts are clearly in control, as evidenced by the overall selling strength of late.
Overnight there was a high momentum move down followed by price creeping back up. This is what many would call a bear flag. The name is irrelevant but what is important is that we are seeing demand consumption (also called compression) which paves the way, once price hits supply again, for price to drop lower.
The actual entry to get into this was a trap / false breakout into former demand becomes supply. No different to the Dax traps we have already looked at. Entry and SL as marked.

There is an error on the second chart which I have just noticed. I have marked a spike down as news based whereas I think it was probably market open / close.

The point of all of this is to show that simple traps like the Dax ones from last week / this morning are fine but, once you add in some other price action tools, you can end up with some quite high scoring trades and, as Wallstreet would say, this was all 'highly predictable'. There was only 1 place that price could go.

20190715eat1a.png20190715eat1b.png20190715eat1c.png
 

The Snip€r

Junior member
23 0
OK - that's a tougher one and not one I would have looked to trade as it's getting in mid way through a move which is too late for me. The lower low I have marked on this chart would have been tradeable for me although it's not currently a 'style' of trading that I use as I prefer to look for other things, like traps. Without going into huge amounts of detail at this stage it's quite hard to explain without a solid grounding in the basic concepts of supply and demand and how they are represented on a chart.

View attachment 264961

The reason that the spike on my previous chart stopped where it did was because price had hit a zone of supply / pocket of orders where sellers were likely to come in. What I (and others) would refer to as a supply zone. The combination of price breaking out through that swing high, then hitting the supply zone, traps buyers on the wrong side of the market.
May be there is a misunderstanding because of the weirdness and utterly bad quality of my trade but for the sake of posterity (lol) i have to ask you if you understood i was short not long on this trade ? (trying to capture 2 points maximum)
 

Bloodhound

Senior member
3,445 1,299
May be there is a misunderstanding because of the weirdness and utterly bad quality of my trade but for the sake of posterity (lol) i have to ask you if you understood i was short not long on this trade ? (trying to capture 2 points maximum)
Good morning Sniper, I think I must have misunderstood you! I thought you were asking about the fast move upwards that you highlighted in post 16? If you mean the short from dodgy supply that you also asked about then I think I explained it to you yesterday. It's not a proper supply zone.
 

The Snip€r

Junior member
23 0
Not wanting to confuse you regarding traps I just thought I'd give you a flavour of how they can be used in a more 'advanced' scenario. Full disclosure that I missed this trade as my alert didn't get hit so I was late to the party. There is quite a lot going on here from a price action point of view but in a nutshell:

Shorts are clearly in control, as evidenced by the overall selling strength of late.
Overnight there was a high momentum move down followed by price creeping back up. This is what many would call a bear flag. The name is irrelevant but what is important is that we are seeing demand consumption (also called compression) which paves the way, once price hits supply again, for price to drop lower.
The actual entry to get into this was a trap / false breakout into former demand becomes supply. No different to the Dax traps we have already looked at. Entry and SL as marked.

There is an error on the second chart which I have just noticed. I have marked a spike down as news based whereas I think it was probably market open / close.

The point of all of this is to show that simple traps like the Dax ones from last week / this morning are fine but, once you add in some other price action tools, you can end up with some quite high scoring trades and, as Wallstreet would say, this was all 'highly predictable'. There was only 1 place that price could go.

View attachment 264965View attachment 264966View attachment 264967

So interesting !!!
Your entry is at 1,60437 and sl around 1,60450 right ?
 

The Snip€r

Junior member
23 0
So the SD zone represented in my link by a blue square qualify itself your requirement in term of crispness and brickwall type or is this area is validated only and also because of the past strong support points it has demonstrated please ? https://ibb.co/GtqbYVh
 

Bloodhound

Senior member
3,445 1,299
That blue square isn't an SD zone as it's too wide and not concise enough. The purple area is, as you correctly point out, a cluster of former support levels (i.e. somewhere that buyers were buying) and thus can (and did) hold as supply when it was retested.

Let me know if that doesn't make sense or if you require further clarification.
 

Bloodhound

Senior member
3,445 1,299
Another trap for you Sniper. Again, this is a variation on a theme and there are some crucial pieces to the jigsaw that I have deliberately omitted but hopefully it will highlight that, with a decent understanding of price action / orderflow, it is possible to pinpoint with a fair degree of accuracy where price is likely to make some decent moves.

20190716cct1a.png20190716cct1b.png20190716cct1c.png
 

The Snip€r

Junior member
23 0
Another trap for you Sniper. Again, this is a variation on a theme and there are some crucial pieces to the jigsaw that I have deliberately omitted but hopefully it will highlight that, with a decent understanding of price action / orderflow, it is possible to pinpoint with a fair degree of accuracy where price is likely to make some decent moves.

View attachment 265031View attachment 265032View attachment 265033
Hey Rob ;) good morning ! (what do we say at 1pm ?)

Questions regarding that trade;

1/ You validate this spot not only with the last weak SD zone but in conjunction with the more meaty previous one i show in the blue rectangle here isn't it ? https://ibb.co/jysf3R
2/ You wait the 4th intrusion to enter in this trade to better gauge where to place an SL with a more educated guess or ?...
3/ So FTB and false breakout/bull trap are the same thing right ?
4/ How do you enter in those spots ? Live with limit order or market order ? Or by pre-placed conditionnal order as it looks like very sharp spikes hence one have to be quick ?
 

Bloodhound

Senior member
3,445 1,299
1. For some reason your screenshot doesn't open?
2. You are in danger of running before you can walk :) There is a lot more to that trade than what I have shown on the chart. Essentially it is FTB to supply with an FB but it then utilises some concepts that I haven't explained. The intention of showing you the trade was really only to highlight the 'power' of FB's.
3. No. An FTB is the first time back to a supply or demand zone. An FB (false breakout) is a buyer or sellers trap which is usually created when price hits a supply or demand zone after a breakout and traps traders the wrong side of the market. Very often this trap will be created when price hits an SD zone on the first time back but can also occur on the 2nd, 3rd, 4th etc. time back too. Of course, as you should have learnt by now, the more times an SD zone is hit the weaker it gets, thus the likelihood of an FB forming when price, for example, hits an SD zone on the 5th time back is going to be much less than on the first time back.
4. I always try to use limit orders unless I'm either a bit late sorting a trade out.