Riding the Wyckoff Wave

[Tannism]

Getting on the springboard. Would this be a logical place to have one develop? Now that I can pick a few, I'd like to watch one develop. Not that I am that good at spotting them. I want it to be like looking for fossils, once you know what a brachiopod looks like and have seen them in the field, they jump out at you especially the perfect ones.

GLW was mentioned on WREV today. The pink line is the mentioned price.

The month isn't over, so we can't use the last bar on the monthly, but the last monthly bar shows up in the daily in the the top right. I am looking at an area of preparation on the monthly.

The daily has had what Wyckoff calls "broadening support" below the change of polarity line. According to 7M, there have been 3 buyings ops.

[zeon]

	Quote:	zeon
	Someone posted 'the sentiment cycle' here. I think it's clear that we are near the end, and not in the denial phase.

Correction here, I meant to say "disbelief phase".
We are now in what I believe to be the denial phase (just before a big run-up higher).

[DbPhoenix]

	Quote:	Tannism
	Getting on the springboard. Would this be a logical place to have one develop? Now that I can pick a few, I'd like to watch one develop. Not that I am that good at spotting them. I want it to be like looking for fossils, once you know what a brachiopod looks like and have seen them in the field, they jump out at you especially the perfect ones. GLW was mentioned on WREV today. The pink line is the mentioned price. The month isn't over, so we can't use the last bar on the monthly, but the last monthly bar shows up in the daily in the the top right. I am looking at an area of preparation on the monthly. The daily has had what Wyckoff calls "broadening support" below the change of polarity line. According to 7M, there have been 3 buyings ops.

It has the shape of a hinge, but volume remained fairly high throughout, suggesting that there has been and is still a lot of supply. Moving up, therefore, may be a struggle. If I had bought this on the "breakout", I'd keep a stop just below the breakout level.

[DbPhoenix]

An interesting "interior" channel on the daily ES.

There are several uses for trendlines and demand/support and supply/resistance lines. The most obvious is to tell you in which direction you're going, up or down. And how fast. And sometimes a trendline can provide a trend "channel". This is determined by first drawing the trendline, then copying it and placing it parallel to the original line in a location where it coincides with what may be the opposite side of a channel. Oftentimes, this doesn't work. There's just no pattern. But sometimes it does, and this can provide clues as to effort, momentum, less obvious S&R, and potential trouble.

Here you have a channel that has been unusually predictable (though not at the beginning, of course). Note that after the channel became established, it found resistance at previous swing points, first at the outer edge of the wider channel, then at the outer edge of what has become an inner channel. Whether the channel lines themselves provide support or resistance is less important than their use in monitoring when and where demand and supply kick in.

To more closely monitor this, W also drew interim lines, such as the dotted lines drawn here. These provided an early warning if, for example, supply came in prior to price's reaching what had been the supply line. If price could not breach this line, this indicated slowing momentum and a possible turning point, particularly if other indications manifested themselves (such as longer-term resistance levels).

In this case, one can angle a demand line upward and a supply line downward into what pattern people might call a "rising wedge" (W wasn't into patterns). When price violates one of these, and it will, the fact of the violation won't matter as much as the manner in which the violation occurs, e.g., with high or low volume. In any event, any one of these lines can provide clues as to levels of support and resistance that might not be otherwise obvious.

[erierambler]

Db,
attached chart with context, meaning trendline down and break, price rises to previous area. 1406 potential support, now tested. Then circle area price collapses. Could this be considered a potential capitulation as far as just price is concerned (reading price action by itself )?
erie

[DbPhoenix]

I don't know that I'd call it capitulation. Price is travelling from the extreme back toward a search for a "value area". There's one potential support area in yesterday afternoon's consolidation, which in turn sits on top of EOD consolidations during the previous two days, all of which means that there's loads of support between 1400 and 1410. This is not to say that price can't cut through all of this like a hot knife through butter all the way back to 1385, but that's not likely to happen today. And it may not happen at all.

In the meantime, I manage this as I've suggested before: begin scaling out at potential support, then the trendline break, then the breach of the last swing high. However, price held at the last swing high in both ES and NQ, so there's no reason to bail. Yet. And EOD traders needn't bail at all.

[erierambler]

	Quote:	DbPhoenix
	I don't know that I'd call it capitulation. Price is travelling from the extreme back toward a search for a "value area". There's one potential support area in yesterday afternoon's consolidation, which in turn sits on top of EOD consolidations during the previous two days, all of which means that there's loads of support between 1400 and 1410.

Thanks, I don't see this type of action very often, but I try to see if one can identify action which may repeat. ( and find trades there ) I know how good you observe Point taken.
erie

[DbPhoenix]

	Quote:	erierambler
	Thanks, I don't see this type of action very often, but I try to see if one can identify action which may repeat. ( and find trades there ) I know how good you observe Point taken. erie

Actually it's common on trend days. Price will drop till lunch time, then waffle around, then continue on in the afternoon. The last swing point provides the boundary of the waffling. Therefore one should not be too concerned about the trendline break.

[erierambler]

	Quote:	DbPhoenix
	I don't know that I'd call it capitulation. .

Yes , after going back through some of my similar charts, I realise that the wording should have been , TOB ( test of bottom/support ). Capitulation was wrong.
erie

[namstrader]

Db, or anyone else, I came across Hank Pruden's Wyckoff website and I would like to know what you think about this guy and perhaps you have read his book "The Three Skills of Top Trading" (there is a 16 page pdf that highlights it of sorts at his site).