I'm not sure I agree with the term 'dangerous' when it comes to decison making in the markets. It implies a degree of certainty, of which there is none. Decision making is about probabilities which are either taken from a systematic or quatitative simulation or from experience. In this example it comes from my 26 years experience. Regardless, its still about probabilities and with that comes the possibility (if not probability) of being wrong.
Any type of analysis is open to interpretation, unless of course if its systamatically quantifiable. What is presented here is not, therefore open to interpretation. Exactly what constitutes a trend? What constitues a range? How I define and how someone else defines these factors is why the world goes around. We all swim in our own pools of logic and if it were any other way then the market would not exist as it does.
I appreciate the open feedback and discussion.
Hi Nick, thanks for the reply.
The thing is, it was your comment that implied certainty, as you said "
there was no other way to look at it" with regards to buyers being in control. I offered an alternative, but it seems to have been ignored? In fact I could offer another couple of alternatives, that would still conclude that buyers were not in control at the point you said they were. Indeed, if you look at the following 2 days it proves buyers were not in control!
So we have to use the evidence in front of us to confirm or deny our analysis. So it is not really open to interpretation here as you can see the outcome, there for you have "fact". So we need to now ask why the market fell again after this apparent "smart money buying event". So they must have been buying for another reason no? (notice i say someone was buying, but i am not saying they are in control). This is why price does not rise from this point.
So what could the volume at point A on QBE really reflect? The problem here is that only large volume is been noticed or been allocated importance on these charts. "Smart money" is heavily involved in at least 3 other areas on the QBE chart, which goes un-noticed by the majority, this is because it does not stand out in relation to high volume levels.
Of course if we keep stating that smart money is involved when we see heavy volume we will eventually get some part of the analysis correct.
What traders really should be striving for is an opportunity where there is no debate of being open to interpretation. This means the need for clarity, and staying away from times in the market that may temporarily deflect us away from clarity (ie new events, reports etc). And in the event of a catastrophe a stop is in place because nothing is 100%.
Bottom line; we should ask ourselves the real reasons we would want to trade if events in the market are open to interpretation. This ultimately would help traders progress far quicker than trying to learn something they dont understand.
There are all sorts of edges available to the individual, some small and some large, so its really upto the trader to decide what they want and how they will get it.
I guess this is what makes the market the apparent jungle it is.
Thanks