wot revisited

[barjon]

Thought I'd try a new series of wots happens next.

So try this for starters. Here's the scene:

You're working in the back room and listening to a vehement argument going on at the morning meeting. Some want to add to the position that's been built up in this instrument, some want to start unwinding it and some want just want to sit on the sidelines. To resolve matters the chart's slung on your desk (you've got nothing else to work with) and you're ask to advise on the course of action to take.

So, what do you advise and why?

have fun

jon

 

[rathcoole_exile]

i'll bracket the recent Lows and the Highs from 15/17 candles back, and wait to see where price goes.
If price breaks through those highs, I'll add to the Longs.
if price dips below those Lows, I'll start to unwind.
If price closes the Gap, I'll flip-flop completely and go Short

 

[scose-no-doubt]

See what happens after gap closes. Probably add to it.

 

[Shakone]

Start unwinding the long position immediately

 

[MrGecko]

Keep it. Then if I am wrong I won't have been the wrongest and stand a chance of keeping my job.

 

[dick_dastardly]

The last bar on the chart is higher than the first bar >>>>> price is going up.

Bank the profit now and look to get back in long at a lower level.


dd

 

[Shakone]

Any chance we'll get Mr Marcus to return and draw a superb picture of what will happen next?

 

[blancspa]

I havnet got a bloody clue
so ride it I say until you puke

 

[counter_violent]

:whistling maybe

 

[MrGecko]

My first response was a bit jokey but my answer is the same.

 

[Mornington Crescent]

I would ask my boss what he would do

let him have the credit if he is right

this business is about survival

 

[secondary]

zz

 

[arabianights]

Random walks is random walks

Whatever this is, one piece of news is gonna blow any chart based prediction right out of the water...

 

[rathcoole_exile]

Hi Barjon,

Thanks for this.. another chance to learn. I missed the boat last time.. but I am really hoping for some wisdom.. I have read and heard various things but I find it difficult to piece the puzzle together. Note please I don't know what I am talking about.

I think the key is knowing what happened in the swing highs and lows - who was in charge ? and discern the implication to the future liquidity by studying the way price and volume have evolved.

I think understanding what happened in between the highs might give us some clue.. looking from the left of the chart I think its reasonably clear the volume has started to pick up. don't know about you guys but the run up in the middle of chart looks clean and strong. Then what explains the weak looking gaps in the beginning? surely if it was sucking up the greedy numpty weak long hands the following price decline would have been accompanied by stronger volume and even further decline. (at this point I think i discovered this is an 1hr time frame stock.. ) but I think this can be explained within the larger context.

My logic would be to understand if the previous high (red line) was the point where the weak buyers came and held on to a loss until now hoping the stock would turn. The weak long holders from previous high will want to sell every good chance there is. I think that gaps are encouraging the suckers to sell the bad positions so the pros can buy it up.

[moving to the final consolidation part of chart] Are the weak boys and gals glad its back up to where they entered and is that why they are exiting and is the selling matched up by the pros buying ? I think the evidence suggests that is the case.

:idea: alternatively, draw 2 lines on the chart,
plan a course of action if either (or both) get triggered
and see where prices takes us
rather than get stuck in analysis paralysis

i know which approach I find less stressful.....but each to their own ......

 

[barjon]

ok then

trader answer from rathy - he gonna let market do the talking
MrG has already heard it start speaking
scose wants it to speak a bit louder
secondary spies more big boys waiting in the long corridor
and arabian staggering about randomly (thought that was only Friday nights )

For those still in a job, the same argument starts again later on. Wot now?

(I've added the first chart again to remind you where we've come from)

jon

 

[rathcoole_exile]

q.v.

 

[Mr. Charts]

the balls are disproportionately small

 

[MrGecko]

I think it's the fact that you drew them geometrically rather than free-hand that speaks volumes.

 

[irastorza]

Hello everyone, I think it will go up, because I believe that the profit taking on the upward leg is not enough, i think that the high volume in the upward leg is derived from weak shorts having to close positions.

 

[arabianights]

Serious question to all those trying to predict.. nay... divine... the future from a few candlesticks:

What on earth is going through your head?`

Let me start to demolish your insane beliefs slowly. Do you think that you would be able to predict the motion of a 100% random walk which produced that pattern?