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[boru]

test

[boru]

hello all, sort of new to this but I have been studying a lot of Wyckoff lately. I would appreciatte any feedback on my chart if you have the time and inclination. Just want to see if I'm going in the right direction Thanks

[douglaszhu]

hi, as a native trader in china, i am trying to apply wyckoff principles to china stock market. one thing confused me a lot and would like to have your comments.

attached is the monthly, weekly and daily charts of the shanghai 50 stocks index.

my ponit is:

1. montly - JOC and maybe there would be a retest to the creek as the sharply break in aug causing big tech damage, there definitely need soem cause to resume the uptrend .
of course there is possibility of trend change but also need cause to go down.

2.weekly- found support and a feeble reaction ( less than 50%) and retest the support at a higher level( due to national holidays there is only 1 trading day in this week and 3 days in last week)

3. what confused me a lot is the daily chart. in the downtrend , demand has to prove itself , look at the volume , very low, specially at the up bar. I think the daily is weak but two bars(green line) I dont know how to interprete . the first is the bar of 9/oct with 5.02% gain at close on 2430 million shares and the second is the bar of 3/sep with 5.04% gain at close on 3966 M shares.

are these two bars can be labeled " no demand " ( i was told no demand bar generally has narrow spread) ? how to interprete these two bars( low volume, large spread, close at almost the high) in the intermediate down trend?

************************* ************************* **************
Pls be noted that we cant sell shorts in china.

************************* ************************* *************

could you pls give some light on thesse two bars with wyckoff method? thanks.

[douglaszhu]

the charts

daily - > weekly -->montly

[douglaszhu]

furthermore , pls correct me if anything wrong or missing, thanks...

[DbPhoenix]

Originally Posted by boru hello all, sort of new to this but I have been studying a lot of Wyckoff lately. I would appreciatte any feedback on my chart if you have the time and inclination. Just want to see if I'm going in the right direction Thanks

You're going in the right direction, but your map needs a bit of re-drawing.

Regarding your first comment, the advance shows a lack of interest only -- apparently -- on the part of sellers. If there were a complete lack of interest, price wouldn't go anywhere. And as for the "apparently", sellers are interested, but they want a better price. So they're willing to give buyers rope until price gets to a point where sellers are more willing to take action. This will occur when price reaches resistance. If buyers can't absorb the extra supply and push price forward, price will reverse.

Less volume on the retest? Yes. But what does that mean?

As to the accumulation, buyers are willing to step up to the plate here and impede or halt the decline. This can be seen by the increase in volume and the result of that increase, i.e., price stops falling. But whether it can be called "accumulation" or not is debatable. There isn't time for much. More likely, sellers just don't want to sell at a level this low. Look at how low volume is on the next trip to R at 1225.

As to your next pair of arrows, take care not to assign to much meaning to volume unless you're at a level where it matters, usually support or resistance. Again, "accumulation" may not be the best way to characterize what's going on here. Suffice it to say that buyers have stepped up and are trying to impede or halt the decline in price. They succeed in doing so easily (if they were having difficulty, volume would be higher during this swing low). This would appear in real time to be a higher low, but one wouldn't know until price exits from the trough that a higher low was in place. There's no other compelling reason to enter here. The "retest" is only a couple of ticks, though there may be more drama on a tick chart, or even a 1m chart (a 5m chart provides you with a summary).

As to your "springboard", technically yes, since a springboard is a preparation for an advance. This particular springboard, however, comes after the real springboard.

Consider an alternative way of looking at all this.

First, locate the trading ranges as well as the important swing points, any or all of which may provide support and resistance in real time. The last important trading range which might affect the activity on this chart was formed the third week of September, from 52 to 76, more or less. The midpoint of this range would be 64 (note how price spends quite a lot of time hovering around this level). The last important swing high that is within the range covered by your chart was at the end of September, at 66 (specifically, 65.75). And if you have any doubts in real time as to whether or not this is really resistance, just watch how price behaves as it moves thru it.

Now back off and divert your attention from specific bars. Look instead at how price is moving. Price makes a higher low after the day's high, then a lower high thereafter. This action should prompt you to think "hinge" in real time and look at what's happening with the volume. If this confirms what you suspect, and it does, then watch what happens as price reaches equilibrium (which, you'll note, is the same midpoint as that of the trading range referred to above). Here there is a test of selling interest accompanied by higher volume. This is usual. But the selling interest isn't there (price doesn't fall). This bodes well for the upside, but not yet. Traders piddle around for half an hour. But eventually price breaks out to the upside (the blue arrow), though few would recognize this as a breakout since it occurs before the more obvious resistance at 66 and since the volume is so low (volume in fact remains low until the more obvious resistance at 66 is penetrated, though even then the volume doesn't come in until after resistance is penetrated). The hinge, therefore, is your springboard. The retracement to 66 after the breakout is what might be called a Last Chance Springboard.

Now about the "breakout volume". As I said above, the big volume comes in after the breakout (you can see this on a small interval, such as 30s). But even if one saw it in hindsight as coming in during the breakout, the big volume is not necessarily good news. The big volume means sellers are finally interested, and they're throwing much more of what they've got at the buyers. Buyers, however, are feeling their oats and pushing price higher until they become exhausted, and price plummets to 65.5. Here now is where the balance of power is determined. Can sellers push price lower? Do they want to? Do buyers have enough bullets left if sellers get serious?

Selling is suddenly withdrawn, and price drifts sideways for a few bars. When volume returns, price moves to the upside, and your Last Chance Springboard is activated. Sellers are offering more supply, but not so much that the advance is squashed. Buyers are able to absorb what sellers are offering and push price higher in the bargain.

But the real volume doesn't come in until after price gets past 67.5. Sellers are being much more aggressive, but one can't drawn any conclusions about buyers' resolve in what's left of the chart. They may be spent, in which case price will fall. Or sellers may be done, in which case price will rise.

It is not, then, about bars and colors and what this or that volume level "means". It's an ongoing, continuous drama of buyers and sellers and demand and supply and the different perceptions everyone has about "value" (which rarely has anything to do with price). This entails a different way of looking at a chart, even in hindsight. In real time, it entails a different way of trading.

[DbPhoenix]

Originally Posted by douglaszhu are these two bars can be labeled " no demand " ( i was told no demand bar generally has narrow spread) ? how to interprete these two bars( low volume, large spread, close at almost the high) in the intermediate down trend? could you pls give some light on thesse two bars with wyckoff method? thanks.

You appear to be confusing Wyckoff with subsequent adaptations of it. There are no "creeks" in Wyckoff. Nor are there "no demand" bars. If you're interested in starting fresh from a Wyckoff viewpoint, I'll be happy to help. Just let me know.

[DbPhoenix]

Originally Posted by douglaszhu hi, as a native trader in china, i am trying to apply wyckoff principles to china stock market. one thing confused me a lot and would like to have your comments. attached is the monthly, weekly and daily charts of the shanghai 50 stocks index. my ponit is: 1. montly - JOC and maybe there would be a retest to the creek as the sharply break in aug causing big tech damage, there definitely need soem cause to resume the uptrend . of course there is possibility of trend change but also need cause to go down. 2.weekly- found support and a feeble reaction ( less than 50%) and retest the support at a higher level( due to national holidays there is only 1 trading day in this week and 3 days in last week) 3. what confused me a lot is the daily chart. in the downtrend , demand has to prove itself , look at the volume , very low, specially at the up bar. I think the daily is weak but two bars(green line) I dont know how to interprete . the first is the bar of 9/oct with 5.02% gain at close on 2430 million shares and the second is the bar of 3/sep with 5.04% gain at close on 3966 M shares. are these two bars can be labeled " no demand " ( i was told no demand bar generally has narrow spread) ? how to interprete these two bars( low volume, large spread, close at almost the high) in the intermediate down trend? ************************* ************************* ************** Pls be noted that we cant sell shorts in china. ************************* ************************* ************* could you pls give some light on thesse two bars with wyckoff method? thanks.

As a follow-up to your PM, keep in mind that Wyckoff (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and (c) exited the positions at the most advantageous time, all with the least possible degree of risk. Therefore, begin with one of his broader measures of strength/weakness, i.e., how the instrument behaves on rallies and declines.

Note on the monthly that price was unable to rally more than 50%. This is not a sign of strength.

The weekly, on the other hand, appears to have found support at the 50% level of its recent rally. On the third hand, there has been no climactic volume at or near the bottom of the decline. The climactic volume has been at the peak of the rally.

Looking at the daily, there again is no climactic volume at the bottom of the decline. And price can't recover more than 50%. However, it appears to find support at the halfway point of the most recent rally attempt.

The overall picture, however, is one of weakness, not strength, particularly since there's been no selling climax, and the significance of any one or two bars is minimal at best. And since traders have used every rally as an opportunity to sell, I wouldn't be eager to jump in quite yet.

[DbPhoenix]

Originally Posted by jfw215 DB, I just read your instructions are how to draw demand/supply lines. It makes so much more sense to me now. I included then in both my daily and 10k anchor charts. Please let me know if I got it right

Drawing demand/supply lines in hindsight is difficult unless one reads the chart from left to right. But difficult or not, there isn't a great deal of point to going back any farther than one needs to. One draws demand lines in order to see where demand is entering the market and propelling a continuation. Therefore, they tend to be tight. But if one is using them to make trade decisions, he will likely find it necessary to include other information, such as how price respects the trendline, or whether or not price holds above the last swing low, or how price reacts to the last support level. Breaking a demand line means little in and of itself other than that momentum has hit a pothole of some sort. They are perhaps most useful when price departs from the trendline, serving to provide an early warning of a change in momentum that might break that trendline, but also serving to remind the trader that the world hasn't come to an end just because momentum has taken what might be no more than a temporary pause.

[boru]

db wanted to thank you for critiquing my chart, it helps lot. I have been under the weather for the last few days or I would have gotten back sooner. After reading your responses I went back to matinthehats thread I feel there is a lot there for me to digest and maybe it won't be so repetetive on the threads anyway thank you John