Real Time Price Action- Clue to Puzzle?

[zeon]

	Quote:	DbPhoenix
	First, all selling climaxes are only potential selling climaxes. You won't know whether or not they were selling climaxes until there's been a successful retest.

Okay, you're right, there's no knowing whether it is actually thé selling climax, but I was just describing what I felt or thought in real time... obviously it's only 100% sure whether something is a selling climax or not in hindsight.

	Quote:	DbPhoenix
	Second, why do you consider this even a potential climax? Why is the volume any more climactic that the earlier volume?

If I don't have much reference to how "high" volume is, then I look to the previous day to compare how "huge" the volume really was. That way I have a means of determining what "the average volume" looks like. Next to that, the first bar at the open is usually pretty high volume because the market just opened. Next to the down bar itself there's an upbar next on comparatively low volume. This is usually confirmation of the selling climax.

[DbPhoenix]

All right. Setting aside the subject of whether you are correct in your assumptions or not, your hypothesis is that this is a selling climax, and because it's taking place at what you hypothesize to be support, you should be on the long side.

Now what did you see, minute by minute, that supported your hypothesis, and what did you see that did not support your hypothesis?

[zeon]

	Quote:	DbPhoenix
	All right. Setting aside the subject of whether you are correct in your assumptions or not, your hypothesis is that this is a selling climax, and because it's taking place at what you hypothesize to be support, you should be on the long side. Now what did you see, minute by minute, that supported your hypothesis, and what did you see that did not support your hypothesis?

Starting from the selling climax, this is how I observed price. Thoughts and feelings included in the analysis

(1) the next bar was an up-bar, as mentioned on lower volume and going straight up... => no supply

(2) at 1400 there was the news, the high volume on this bar is ignored

(3) at 1409 there's decent volume and a wide spread bar but price closes in the middle, looks like there is still some supply in the market left that prevents price from rising

(4) next candle, reasonable volume and price goes down... so I'd expect price to test the support again

(5) next candle, price tries to rise, but fails to do so and closes at the low, but still not lower than the previous candle: looks like there's already some buying coming in, supports the hypothesis

(6) the 're-test bar': higher volume than the previous two bars: but small spread => all the effort from sellers is apparently being absorbed by traders who are buying at this level, otherwise the high volume would see price fall further; instead price hardly moves and the candle closes off the lows, hypothesis very likely

(7) at 1421 there's an upbar, on the lowest volume of all... here we go: lift-off: no more supply left and price rises becauses there's no selling pressure, hypothesis confirmed

(8) at 1424 sudden rise in volume and wide spread down bar... what the hell?

(9) ah, another low volume upbar, perhaps sellers weren't quite flushed out completely in the previous bar and price will rise now, starting to feel some fear...

(10) what? how can this happen? wide spread down bar and it goes below the low of the potential selling climax... my stop was there so I'm stopped out... hypothesis apparently incorrect

[DbPhoenix]

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I've drawn in the "potential" resistance level you mentioned earlier.

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How does this change your perception of strength v weakness?

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[zeon]

	Quote:	DbPhoenix
	. I've drawn in the "potential" resistance level you mentioned earlier. . . How does this change your perception of strength v weakness? .

It now looks as if this:

"(3) at 1409 there's decent volume and a wide spread bar but price closes in the middle, looks like there is still some supply in the market left that prevents price from rising"

was some sort of rejection from resistance.

If that was a rejection, than the candles that I named a "re-test" look like weakness and no buying...

But then again, if I remove my "support", everything starts to look different.

[DbPhoenix]

	Quote:	zeon
	It now looks as if this: "(3) at 1409 there's decent volume and a wide spread bar but price closes in the middle, looks like there is still some supply in the market left that prevents price from rising" was some sort of rejection from resistance. If that was a rejection, than the candles that I named a "re-test" look like weakness and no buying... But then again, if I remove my "support", everything starts to look different.

Price determines where support and resistance lie, not the trader. Finding a point here and a point there and drawing lines across them may give the trader the illusion of finding support and resistance, but that's exactly what it is: an illusion. What matters is remaining sensitive to the flow of information regarding the balance of power between buyers and sellers, not in dithering over trivia that price couldn't care less about.

This is not to say that you should make no attempt to locate those areas most likely to act as turning points for price, but dont succumb to nonsense. Use your head. And when price approaches those levels or enters those zones where you think turning points are most likely to occur, you must remain absolutely free of bias so that you can interpret the dance between price and volume, demand and supply accurately. Either that or adopt the biases both of those who are long and those who are short. Argue the case of each simultaneously. And if the windows don't open, stand aside.

If bars and closes and so forth aren't working for you, consider trading price. Just for the hell of it, try to determine where strength and weakness lie here during the same timeframe as in the earlier charts:

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[zeon]

	Quote:	DbPhoenix
	Price determines where support and resistance lie, not the trader. Finding a point here and a point there and drawing lines across them may give the trader the illusion of finding support and resistance, but that's exactly what it is: an illusion. What matters is remaining sensitive to the flow of information regarding the balance of power between buyers and sellers, not in dithering over trivia that price couldn't care less about. .

True, but - as I posted in my "minute-by-minute" analysis - I had more elements to support the long case than not. And given that price reacted to my line at 1342 in the first place, it was a confirmation of support.

	Quote:	DbPhoenix
	This is not to say that you should make no attempt to locate those areas most likely to act as turning points for price, but dont succumb to nonsense. Use your head. And when price approaches those levels or enters those zones where you think turning points are most likely to occur, you must remain absolutely free of bias so that you can interpret the dance between price and volume, demand and supply accurately. Either that or adopt the biases both of those who are long and those who are short. Argue the case of each simultaneously. And if the windows don't open, stand aside. .

I've found that hard to do when trading. Easy when you're not trading perhaps and just standing aside, but when you're actually putting a trade on and you're focusing on elements to contradict your trade, one can always find some. If I look hard enough, there'll always be signals that invalidate a trade, but by doing so, I probably never put a trade on.

	Quote:	DbPhoenix
	If bars and closes and so forth aren't working for you, consider trading price. Just for the hell of it, try to determine where strength and weakness lie here during the same timeframe as in the earlier charts:

I'm not quite sure what I'm supposed to do with the chart, but I gave it a try... but I'm not sure if this even comes close to what you had in mind.

[DbPhoenix]

	Quote:	zeon
	True, but - as I posted in my "minute-by-minute" analysis - I had more elements to support the long case than not. And given that price reacted to my line at 1342 in the first place, it was a confirmation of support.

You had more elements to support the long case because you weren't sensitive to those that spoke against it.

As to the reaction at 42, that's fine. But you traded off 44.5.

	Quote:
	If I look hard enough, there'll always be signals that invalidate a trade, but by doing so, I probably never put a trade on.

No, you'd take only the best ones. You have to decide whether you want to trade or you want to make money.

As for the chart, I imagine at least a couple of people have been following this. I'll let them take a whack at it, if they can do so without being contaminated by hindsight.