Real Time Price Action- Clue to Puzzle?

[DbPhoenix]

I posted this chart yesterday to provide context for the movements that the market has been making over the past few weeks, though I had not extended the demand and supply lines all the way to the right edge.

However, the zone can easily be expanded to include the band just above. Whether we actually make it that far is to be seen. But it is certainly within the realm of possibility. In that event, the midpoint will of course be raised.

I also posted this chart as a response to a question about where to locate S/R. I look, in order of importance, to zones, then levels, then points. It's interesting that price rallied to 1760 overnight.

The relevance to RT trading, of course, is that one must first find those areas or levels where traders are most likely to get excited and perhaps prompt a reversal or continuation. Today that area would appear to be 1750/60.

[zeon]

	Quote:	DbPhoenix
	I also posted this chart as a response to a question about where to locate S/R. I look, in order of importance, to zones, then levels, then points. It's interesting that price rallied to 1760 overnight.

I'm trying to understand a bit better all those lines drawn on your chart, but they are still confusing. I thought I had a reasonable idea to identify support and resistance, but now I'm not so sure anymore. I only trade the ES, but I had a look at the NDX recently because all of your charts are that market and I'd like to understand the concepts better.

So here is my question: if I look at last couple of weeks it seems 1765-1770 is more important. That level was "tested" (hope I'm using the right terms here) twice on the 25th and another time on the 26th where it started to rally big time. Then on the 29th it seemed to find support there, but then fell through.

Then today (just now) we seemed to find resistance around 1765, which coincides with the earlier levels.

	Quote:	DbPhoenix
	The relevance to RT trading, of course, is that one must first find those areas or levels where traders are most likely to get excited and perhaps prompt a reversal or continuation. Today that area would appear to be 1750/60.

That's another question I have. Last couple of days you said something in the line of "today that seems to be...". So this is confusing me, how can you make real time decisions if price is finding support at different levels each time? 1750-1760 is 10 points wide, and although I haven't really a good idea about how wide a stop should be no the NDX, this seems like an awful wide zone to trade from. 5 points on the ES is already wide for my risk threshold

Btw, how do you manage to show those images inline in the post?

[DbPhoenix]

	Quote:	zeon
	I'm trying to understand a bit better all those lines drawn on your chart, but they are still confusing. I thought I had a reasonable idea to identify support and resistance, but now I'm not so sure anymore. I only trade the ES, but I had a look at the NDX recently because all of your charts are that market and I'd like to understand the concepts better. So here is my question: if I look at last couple of weeks it seems 1765-1770 is more important. That level was "tested" (hope I'm using the right terms here) twice on the 25th and another time on the 26th where it started to rally big time. Then on the 29th it seemed to find support there, but then fell through. Then today (just now) we seemed to find resistance around 1765, which coincides with the earlier levels.

As I explain in the "Springboard" post to my Blog, the "zone" is found by determining the greatest quantity of trading activity over the period under consideration. It's general, forming what is more or less a bell curve. One can narrow this down to get an equilibrium level, or widen it to find the limits at that time for support and resistance. The entire zone, however, provides its own support or resistance once price leaves it.

Within the outer edges of this zone, there will be "levels" (see above chart) where tests have occurred. These aren't as important as the zone in its entirety because they don't represent much trading activity. The more these levels are tested, of course, the more trading activity. The more trading activity, the more potential S/R. What matters is not that they guarantee turning points but that you're aware of them before trading activity reaches them again.

	Quote:
	That's another question I have. Last couple of days you said something in the line of "today that seems to be...". So this is confusing me, how can you make real time decisions if price is finding support at different levels each time? 1750-1760 is 10 points wide, and although I haven't really a good idea about how wide a stop should be no the NDX, this seems like an awful wide zone to trade from. 5 points on the ES is already wide for my risk threshold

Locate the most likely S/R zones and levels ahead of time, then study what happens to the trading activity if and when the zones or levels are reached. These zones and levels and points are not guaranteed. That's the purpose of trading RT rather than putting in your orders and going to the movies.

	Quote:
	Btw, how do you manage to show those images inline in the post?

Use the image icon in your toolbar and supply the url of the image you've uploaded.

[DbPhoenix]

Zeroing in further . . .

to a daily EOD chart

[DbPhoenix]

This particular chart is not derived directly from the two charts above it that are included in the same post (#21). Its purpose is to show three types of S/R, not to illustrate a "zoom in".

At the time I drew it, the bulk of the trading activity was between 1760 and 1800, within the hinge, with the midpoint, or greatest number of trades, at 1780. Now, however, with so much trading activity between 1760 and 1710 over the past few days, the volume is more evenly spread across a wider zone.

[zeon]

	Quote:	zeon
	So here is my question: if I look at last couple of weeks it seems 1765-1770 is more important. That level was "tested" (hope I'm using the right terms here) twice on the 25th and another time on the 26th where it started to rally big time. Then on the 29th it seemed to find support there, but then fell through.

Perhaps I understand S/R better than I realized. 1765-1770 is exactly where price just peaked and -if I'm saying this the right way- selling pressure is coming in.

[DbPhoenix]

	Quote:	zeon
	Perhaps I understand S/R better than I realized. 1765-1770 is exactly where price just peaked and -if I'm saying this the right way- selling pressure is coming in.

However, 72-74 was also tested. It's the nature of the S/R zone that there will be a number of potential levels to watch. That's why one has to wait until price actually gets there before determining what's potential and what's actual. If it doesn't prompt a response from traders, it's not important.

[zeon]

	Quote:	DbPhoenix
	However, 72-74 was also tested. It's the nature of the S/R zone that there will be a number of potential levels to watch. That's why one has to wait until price actually gets there before determining what's potential and what's actual. If it doesn't prompt a response from traders, it's not important.

Sorry for any misunderstanding, but could you perhaps add a chart of somekind? I don't see 72-74 on my chart, have looked at the futures and the cash prices. Am I missing something or are you perhaps talking about a different day?

[DbPhoenix]

The chart above, the 12th, 15th, and 20th.

[tune]

Interesting how little volume it took to break quickly above the earlier highs and that the trading activity increased as it reached that peak.



Edit: Ignore that, just checked elsewhere and my feed is wrong. Very wrong.