Why there?

[Shakone]

For my own education, and perhaps others, I'm looking at why price turned where it did. I'm interested in any reasons that you can reasonably back up. If you think it is because of a Fib retracement, something on the DOM in the respective future, market profile, manipulation, stop run, a trendline, whatever (that includes indicators!), I'm interested in hearing it.

So my own 'model' of price thinks of it as moving between areas of potential support and resistance, on different timeframes. I draw a region around recent lows (horizontal lines), and if broken through, I leave them there for a possible SbR or RbS effect.

Now 1st March, 8am bar, we see a move up above the overnight high (stops taken?), above the 28th Feb 5pm bar (more stops?) and into previous potential support become resistance area with confluence of the round number 1.3100 and it turns there.

Now I didn't know it would turn there, not many people would know, but there was at least a reasonable expectation that it 'could'. This is important as it means we can take profits or adjust stops, manage our position better etc.

So then I am interested in the unusual ones that don't fit into my model, that will fit into many of yours I'm sure.

So why the turn at the low 1.2967. The time 3pm is relevant to me. Aside from the U.S. news out then, we quite often get a reversal around this time. but why at 1.2967, but why not push a bit lower to 1.2950 or wherever else?

Also why the turn at 1.3042 at the 5pm bar?

P.S. please post any other charts in which you were confused/surprised by the location of a turn. I am thinking that if it progresses we will find a core set of ideas that relate to most (but never all) turns.

 

[Shakone]

In relation to Robster's trade dissection first trade, my resistance levels again drawn on hourly (the top region/two lines are from 25th Feb). This is all very simple, and we're not talking about entries, just understanding of price. Robster although trading a different way to me, was acutely aware of that region at the top as he was planning to take profits there (see his post).

 

[tar]

So why the turn at the low 1.2967. The time 3pm is relevant to me. Aside from the U.S. news out then, we quite often get a reversal around this time. but why at 1.2967, but why not push a bit lower to 1.2950 or wherever else?

Also why the turn at 1.3042 at the 5pm bar?
.

You shouldn't expect a reason for every single move , this is a market of buyers and sellers , supply and demand , market moves in waves , now more buyers then maybe more sellers and so on , different waves , weak wave , strong wave , when it broke 1.3 more sellers came which is expected but how many sellers no body knows , they sold it to 67 and then there is no more sellers , no specific reason for that , it has to stop at some point , supply and demand fluctuates . Ofcourse after the event now everyone will give you a reason and an answer .

 

[Shakone]

You shouldn't expect a reason for every single move , this is a market of buyers and sellers , supply and demand , market moves in waves , now more buyers then maybe more sellers and so on , different waves , weak wave , strong wave , when it broke 1.3 more sellers came which is expected but how many sellers no body knows , they sold it to 67 and then there is no more sellers , no specific reason for that , it has to stop at some point , supply and demand fluctuates . Ofcourse after the event now everyone will give you a reason and an answer .

I don't expect a reason for every single move. It's not about that. The reasons for all moves are in some sense the same,as you pointed out. It's not, because there is a line, it bounced here. It doesn't bounce off lines people draw for the sake of it.

The issue is about location. Why there, and not elsewhere? The reason may be a wave of buyers and then a wave of sellers. Fine. What can we say about where those waves end, begin. If we can't say anything about the where the waves begin or end then what can we say?

If your answer is, it turned there because it just did, then ok. You're saying there is no way to guess where it 'might' likely turn. Not even to any degree of accuracy. It is just completely random and is equally likely to turn at any point. Are you sure?

There are two choices here:
(i) It's completely random, and there is no reason at all for it
(ii) It' has some randomness but I may be able to narrow it down or define some areas where it is more likely to turn than others, or perhaps even spot that it is turning early.

I'm interested in (ii) for this thread, because if we assume (i) none of us could ever make money in the long term.

 

[Triggerfish]

Well, there is a reason for every move in the price.....as the market is ALWAYS at equilibrium hence should there be more buyers than sellers, the prices will move up.....and if there is more sellers than buyers then the prices will move down......but there is more than this is there not? I think Shakone is asking interesting questions.

 

[tar]

If it went down 300 pips then yes there is a reason and i want answers , if it went down 70 pips then reversed 20 pips i don't expect a reason for that and i wouldn't buy any answers although it could be true but i am not interested . Like my BP if it went up from 115 to 125 intraday i wouldn't worry , but if it rose to 140 and stayed there for a while i will give my doc a visit ....

 

[malaguti]

I don't expect a reason for every single move. It's not about that. The reasons for all moves are in some sense the same,as you pointed out. It's not, because there is a line, it bounced here. It doesn't bounce off lines people draw for the sake of it.

The issue is about location. Why there, and not elsewhere? The reason may be a wave of buyers and then a wave of sellers. Fine. What can we say about where those waves end, begin. If we can't say anything about the where the waves begin or end then what can we say?

If your answer is, it turned there because it just did, then ok. You're saying there is no way to guess where it 'might' likely turn. Not even to any degree of accuracy. It is just completely random and is equally likely to turn at any point. Are you sure?

There are two choices here:
(i) It's completely random, and there is no reason at all for it
(ii) It' has some randomness but I may be able to narrow it down or define some areas where it is more likely to turn than others, or perhaps even spot that it is turning early.

I'm interested in (ii) for this thread, because if we assume (i) none of us could ever make money in the long term.

I think it does bounce off lines, just not the lines you can draw and the lines you can see..unless you are looking at the right sort of chart..give me a mo and I'll dig out the chart as an example

 

[Shakone]

If it went down 300 pips then yes there is a reason and i want answers , if it went down 70 pips then reversed 20 pips i don't expect a reason for that and i wouldn't buy any answers although it could be true but i am not interested . Like my BP if it went up from 115 to 125 intraday i wouldn't worry , but if it rose to 140 and stayed there for a while i will give my doc a visit ....

Sure...

That's a question of scale. If I switched to a monthly and asked why the July 2012 low was 1.2042 and why the current high since is 1.3711 does that change anything? Talking about 1700 pip range any different? Same question for me. For you maybe different and you're not interested. These small movements are perhaps noise, not interesting, not relevant, random whatever. And you may be right. For me it is a fundamental question.

So far then we have that the selling wave just ended at 1.2967 for no particular reason, then there was a buying wave which ended at 1.3043 for no particular reason (in terms of location that is, of course there were more willing to sell at that price, that was the reason, but no reason why THERE etc.). Tar it would be nice to know when you consider the selling wave began and when it ended (if it did), and when the buying wave began.

 

[barjon]

mmm, you don't see many charts in evidence when you see pictures of fx trading floors - nor in gamma jammer's illuminating "day in the life of" articles.

If you were a big player fulfilling some large orders you'd stop when you'd completed them, whatever price happened to be at the time.

 

[tar]

Sure...

That's a question of scale. If I switched to a monthly and asked why the July 2012 low was 1.2042 and why the current high since is 1.3711 does that change anything? Talking about 1700 pip range any different? Same question for me. For you maybe different and you're not interested. These small movements are perhaps noise, not interesting, not relevant, random whatever. For me it is a fundamental question.

So far then we have that the selling wave just ended at 1.2967 for no particular reason, then there was a buying wave which ended at 1.3043 for no particular reason. Any other ideas?

No i wouldn't expect a reason for the exact monthly low print either . In your example if there was a specific real reason for it you should see a huge move and a strong reversal at 1.2967 with a huge volume , cuz there was a reason and everyone else saw it coming .

 

[Shakone]

mmm, you don't see many charts in evidence when you see pictures of fx trading floors - nor in gamma jammer's illuminating "day in the life of" articles.

If you were a big player fulfilling some large orders you'd stop when you'd completed them, whatever price happened to be at the time.

So do you think they fill their orders at any price, that it's effectively random to the rest of the market (and to them)? If they don't care about the price of execution...do they care about the time they execute? Do they care about anything? Are billions thrown around with such randomness?

This is a valid answer if that's what you think. I have no problem with that or tar's response. It's not a right or wrong thread. It's a 'why there' thread with many possible answers.

 

[wallstreetwarrior87]

You shouldn't expect a reason for every single move ,.

Whether we expect to be given one or not is different to the fact that there IS a reason for everything. This is not to say that finding the reason is either easy or necessary. What matters is how we use the information should we have a good idea of what the reason is. Of course the reason may be of value to you but not to me and visa versa.

when it broke 1.3 more sellers came which is expected but how many sellers no body knows , they sold it to 67 and then there is no more sellers , no specific reason for that.

Yes breaking the round number should bring in more sellers. The reason for the market stopping at 67 is that the selling dominace has been overcome. Yes we can see that now, but it is how we use this information going forward that will help us, as we trade from the now into the future.

So: at 67 we have a situation that either, counter traders have entered, shorts are covering for profit or there are genuinely no more sellers about. So all will lead to a different outcome no?

This is what discretionary (darksiding) trading is all about, and another reason why I personally believe that this can not be programmed (just my opinion), and also I dont want to go off topic, so will stop talking about programming.

So for example, if you had a good idea that this was only profit taking: would you be long here? What would be your gameplan? etc

Ofcourse after the event now everyone will give you a reason and an answer .

Best to theorise in the barracks rather than go hell for leather in the battlefield. After the close is the only time we have to sit down and go through the action and ask the questions. If we find ourselves asking them for the first time in realtime, we are probably not really ready to be trading yet.

Remember just because we have the answer book infront of us, does not mean we are asking the right question. Hence the long learning curve.

Anyway babbling on, yes there is a reason for everything, but unlikely we will find out every reason. Dont understand the reason = dont take the trade. Then at least you give yourself the best chance of high probability trading as possible.

I get the impression that the posters so far have an interest in discretionary trading, hence the questions been posed so far.

Would this be correct?

 

[tar]

So do you think they fill their orders at any price, that it's effectively random to the rest of the market (and to them)? If they don't care about the price of execution...do they care about the time they execute? Do they care about anything? Are billions thrown around with such randomness?

This is a valid answer if that's what you think. I have no problem with that or tar's response. It's not a right or wrong thread. It's a 'why there' thread with many possible answers.

Dont get me wrong sometimes there is a reason sometimes just a wave of sellers ended after 20 pips or whatever , and that's what Barjon was saying , they wanted to sell 100 Billion for example , they are looking to target 1.27 or 1.25 , they started selling from 1.3 to 1.2970 then they stopped selling ( full order filled ) .

 

[neil]

I don't expect a reason for every single move. It's not about that. The reasons for all moves are in some sense the same,as you pointed out. It's not, because there is a line, it bounced here. It doesn't bounce off lines people draw for the sake of it.

The issue is about location. Why there, and not elsewhere? The reason may be a wave of buyers and then a wave of sellers. Fine. What can we say about where those waves end, begin. If we can't say anything about the where the waves begin or end then what can we say?

If your answer is, it turned there because it just did, then ok. You're saying there is no way to guess where it 'might' likely turn. Not even to any degree of accuracy. It is just completely random and is equally likely to turn at any point. Are you sure?

There are two choices here:
(i) It's completely random, and there is no reason at all for it
(ii) It' has some randomness but I may be able to narrow it down or define some areas where it is more likely to turn than others, or perhaps even spot that it is turning early.

I'm interested in (ii) for this thread, because if we assume (i) none of us could ever make money in the long term.

Probability -the likelyhood of price being affected by a convergence of events maybe: volume or price levels, support/resistance, round numbers and other TA approaches. Maybe people use these approaches to limit their entries into the market in the hope of achieving better than "average" positive outcomes plus trade management to make a profit. I think the upshot is that we take a punt when taking into account our favourite approaches then manage the trade should it either move into profit or loss. What people fail to realise is, that all approaches are not profitable everytime, their is no certainty whatever approach you take, only a reason to get into a trade and managing it when in one. The biggest factor in my view (humble) is psychology but few people mention or realise this unless they actually trade!
Apologies for not delivering a "how to" treatise but if it were that easy then all would make money and (most important) I would not share this golden egg with you

 

[tar]

Yes breaking the round number should bring in more sellers. The reason for the market stopping at 67 is that the selling dominace has been overcome. Yes we can see that now, but it is how we use this information going forward that will help us, as we trade from the now into the future.

So: at 67 we have a situation that either, counter traders have entered, shorts are covering for profit or there are genuinely no more sellers about. So all will lead to a different outcome no?

You didn't answer his question , and that's exactly what i said , the selling stopped at 67 then buyers came , but his question is why 67 why not 50 , the answer is cuz sellers are done at the price 1.2967 but why ? give me a reason ? sometimes there is a reason sometimes not , it just happen that at the moment sellers were weaker and done , supply-demand balance , wave after wave and so on ....

 

[barjon]

So do you think they fill their orders at any price, that it's effectively random to the rest of the market (and to them)? If they don't care about the price of execution...do they care about the time they execute? Do they care about anything? Are billions thrown around with such randomness?

This is a valid answer if that's what you think. I have no problem with that or tar's response. It's not a right or wrong thread. It's a 'why there' thread with many possible answers.

No, I didn't say they filled their orders at any price, they want to get "value" for their client and will manage building the required position with that in mind. What I said was that they will stop their activity when they have fulfilled the order whatever price happens to be when they've bought (sold) the last lot. If their activity has been a significant feature in what price has been doing, then their departure may well cause a turn with their buying (selling) pressure absent. ie: as tar says

 

[wallstreetwarrior87]

You didn't answer his question , and that's exactly what i said , the selling stopped at 67 then buyers came , but his question is why 67 why not 50 , the answer is cuz sellers are done at the price 1.2967 but why ? give me a reason ? sometimes there is a reason sometimes not , it just happen that at the moment sellers were weaker and done , supply-demand balance , wave after wave and so on ....

Is the number created not the outcome of the reason? Then whats left infront of us is the footprint so to speak. Hope that doesnt sound too confusing, I can be a bit that way:cheesy:

What Im getting at, is it the number that is important?

 

[malaguti]

I think it does bounce off lines, just not the lines you can draw and the lines you can see..unless you are looking at the right sort of chart..give me a mo and I'll dig out the chart as an example

sorry about that..here;s the sell off of the S&P as it gapped down on friday
and then the P&F chart
the P&F chart is not an arbitrary line, and measures the constant rate of reversal

thats not coincidence, it happens every single day for me

 

[robster970]

What Im getting at, is it the number that is important?

It is merely a point of reference that can be used to mark where people have or have not traded. For me personally where there is no trade facilitation (little or no volume) is as important as where a lot of volume was traded.

Some smart bugger once told me that it was all about time and price with volume to confirm. It took me some time to understand that and then be able to put it into practise.

@shakone - when I do prep on Monday it will also include HVN and LVN as well as S/R off the hourly

 

[wallstreetwarrior87]

sorry about that..here;s the sell off of the S&P as it gapped down on friday
and then the P&F chart
the P&F chart is not an arbitrary line, and measures the constant rate of reversal

thats not coincidence, it happens every single day for me

Interesting. Sorry for my ignorance, but what does the blue line represent/measure, and is the blue line in place on your chart before the sell off from 1520?

Thanks