Riding the Wyckoff Wave

[DbPhoenix]

	Quote:	gassah
	I'm curious about the double bottom because McLaren, with 40 years of experience, states that double bottoms rarely end down trends. They are terrific in up trends but usually fail in down trends. The reverse is true of double tops.

And others say that neither is true, that markets reverse in rounded tops and bottoms. So I guess it depends on what you're looking at and who you're listening to.

Which is why it's important, as Schabacker says, to focus on the behavior creating the pattern and not on the pattern itself. You provided a good example of that in the chart you posted.

Whether W would be trading this at all is debatable since, technically, we aren't trending at all; we've been consolidating for three months. A hundred years ago, ranges such as these were only a few points wide. Now they're 200pts (or at least this one is), so the trips from top to bottom and back again are actually worth trading.

[DbPhoenix]

	Quote:	DbPhoenix
	And others say that neither is true, that markets reverse in rounded tops and bottoms. So I guess it depends on what you're looking at and who you're listening to. Which is why it's important, as Schabacker says, to focus on the behavior creating the pattern and not on the pattern itself. You provided a good example of that in the chart you posted.

Even though the blood is now flowing to my head, I still can't remember who said this, though it must have been somebody I pay close attention to, and there aren't many: Mamis, Schabacker, Magee, a couple of others. But I do recall now that whoever it was said that corrections end in double tops and bottoms but bull and bear markets don't, rather the latter end in rounded tops and bottoms.

Of course, "the exception proves the rule" blah blah. The Nasdaq ended in a peculiar sort of triple top in '00, which to me was classic Wyckoff, though others might disagree.

[gassah]

GBPUSD is challenging the supply line today of a falling wedge? I'm not a pattern guy.

[gassah]

Of more importance is the terminal shakeout (GBPUSD) and apparent follow through today that offered an intraday entry. I'll find the relevant material from the course.

[DbPhoenix]

W might call the area encompassed by the red lines a hinge (Schabacker would prefer that it be filled with price, i.e., the 0950 swing high should reach all the way to the top red line). A pattern person might see a rising wedge -- the area encompassed by the blue lines.

Either way, the result is the same, a continuation of the move down from 1870.

[gassah]

The Terminal Shakeout (TSO) - Wyckoff

"A Terminal Shakeout is a rapid or precipitous downward movement, occurring at or near the end of a period of preparation for an advance. In the case of deliberate manipulation, the purpose of the terminal shakeout is to scare holders of stock into selling out; to catch stops which may have been placed on long positions below the previous line of supports in the accumulation zone, in other words, mop up as much cheap stock as possible; and to encourage short selling around the bottom on the part of the public. After the bag has thus been held for the weak holders and amateur shorts, the strings are pulled to lock in these shorts and to shut out the sold out bulls. This may be done either by a gradual or by a rapid recovery in the price.

It makes no practical difference whether a shakeout is due to manipulation or panicky selling on the part of distressed longs. In either case, the selling that forces the sharp downward acceleration of the price movement is due to supply of poor quality. And the ensuing recovery is caused by the superior quality of the demand which is taking advantage of frightened sellers."

They come in a variety of shapes and sizes. I see GBPUSD on the 60m as one.

[zeon]

As for the talk about the buying climax recently...

I was wondering what the enormous volume peak yesterday near the close could mean. I had actually closed my papertrade long 1 minute before the sudden jump that moved us from 1847 to 1867 and higher

Could this be a buying climax or has this more to do with news or the fact that people are closing their position near the end of the day?

The chart is from BigCharts, but my data feed gives me a similar volume rise, which is in the context of intraday trading really extraordinary...

[habi]

	Quote:	zeon
	As for the talk about the buying climax recently... I was wondering what the enormous volume peak yesterday near the close could mean. I had actually closed my papertrade long 1 minute before the sudden jump that moved us from 1847 to 1867 and higher Could this be a buying climax or has this more to do with news or the fact that people are closing their position near the end of the day? The chart is from BigCharts, but my data feed gives me a similar volume rise, which is in the context of intraday trading really extraordinary...

The volume peak was one minute after the close, when Google news were released.
Wednesday we had a strong up-move too, but it looks different comparing the volume. The volume peak on Wednesday was in the high area, yesterday we went up on the first bar with the highest volume. Thats maybe the reason, why we can stay up for now.

[treadstone]

I thought I'd upload this volume by price chart of the NQ. I've seen Db comment on the extremes of these bell curve volume distributions being potentially good areas to trade from.

I'm not an expert by any means however, so I'll leave further commentary to Db or gassah.

[DbPhoenix]

I don't know that any comment is necessary, treadstone. A picture's worth etc etc.

I should caution those who are new to this, however, that the VAP distribution is current. Before drawing any conclusions regarding trades prior to, say, the 16th, a new chart would have to be drawn that does not include the 16th or 17th or today. In this case, it might not matter. In most cases, however, the VAP distribution will be considerably different. Not that one can trade the past anyway, but if one is backtesting this, he can test only the right edge, and the data must end there (as opposed to just scrolling back).