Wide Range Bodies or 'big' candles

[waveslider]

Yep, It aint rocketscience, but it tells you where you are. If you combine multiple timeframes it might be more useful..
I have it on my screen and it serves as a decent filter to keep me from top/bottom picking. Maybe if I watch it longer it will give me more ideas..

[Anonymous]

	Quote:	waveslider
	..... I have done some testing and found that by counting the number of bullish WRBs compared to bearish WRBs you have a pretty good trend/bias filter. Spark any ideas?

Nice to have a new voice with us. Welcome. Thanks for posting.

One question: how do you determine a Bullish WRB from a Bearish one?

I have attached a chart that has a number of white (close>open) WRBs. But of the 4 shown (there are more), 2 are actually bearish in nature.

The first WRB on the left hand side has ultra high volume and supply entered the market on that candle. Hence I would say this is a bearish WRB.

The Next WRB is the best of all. While it is not large, it does engulf the previous candle and is Effort to Rise (VSA). In fact, a valid Engulfing pattern is formed. With this engulfing WRB within the body of the larger WRB, there would be a signal to get long.

The Next WRB is Large with Ultra High Volume as well. But this time, the market is pushing thru supply, hence the high volume. Where the first WRB was bearish because of high volume, this one is bullish because of high volume. Smart Money is willing to absorb the supply here, hence the high volume. If the Smart Money is willing to buy at higher prices, they must be expecting even higher prices.

The final WRB shown is another large white WRB. Here we do have Effort to Rise as seen in volume and close. But this time we end up with No result from an Effort to Rise. This is bearish. In fact, what can not be seen is a No Demand signal that comes within the body of this WRB which could of signaled a short trade after seeing the weakness of no results from an effort to rise.

So, I ask again, How are you determining the nature of the WRB? I hope you are using more than just open vs. close.

[waveslider]

HI Pivot,

As we both know, WRB is no silverbullet. As with any indicator, method, there are time when it is better to actually flip the system and do the opposite. So a bullish WRB (close above open for this example) could actually be a sell signal.

This little indicator does use close>open as a bullish indication, but it is nothing without the proper filters applied.

I enjoyed your analysis. And I agree, just using close > open as a bullish analysis is incorrect. However it can be use-able as is. Say you have a "bullish" WRB at the top as you did - this market could still be considered bullish and above support as long as price remained above the open of that bullish bar. In fact after the bar you showed at the top there, price was caught in a range, possibly preparing for a move higher? Possibly not.

If we can agree that WRBs (bullish or bearish) mark important support and resistance then maybe we can leave it at that and each use that info for what its worth.

What you are doing in your analysis is something that could not be replicated with a simple indicator. To me, indicators are only to grab attention and provide confirmation based on proven probabilities, I'm sure you would agree.

slider

[Anonymous]

Just found this a bit interesting.

First, there is a chart in the VSA thread that shows an entry set up into this market much earlier. This is later in the move to be sure, but none the less telling.

Check out the chart below.

There are two candles that constitute Effort to Fall. Effort to Fall means that the Smart Money wants to take prices down. They are interested in falling prices. As it happens, these two candles are also WRBs. WRB represent possible changes/shifts in supply and demand.

Notice that within the shaded area we have white hammer line. The next candle closes up, but on volume less than the previous two candles. And on a very narrow range. Plus, the volume is less than average. Simply, it is No Demand.

Now the interesting thing happens on the dark inverted hammer line.

Many people will say that the shadow on a candle means price rejection.

Take a look at it here. Note that the Long Shadow is as high as the high of the first WRB (effort to fall candle). In other words, price moved into an area of weakness (downside strength) and was rejected. Also note that the second WRB also covers a good deal of the Long Shadows depth.

If you were thinking the move is over, there is evidence to the contrary.

Kinda' cool how that worked out.

[brownsfan019]

Pivot - nice chart. Here's what I see - if you are short somewhere into that nice down move, you had about 2 WRB's that gave really nice exits.

You guys are taking WRB's into a the next level and for those like me that like to keep it simple, exiting based on visual WRB's is a clean, simple way to go. It's not perfect as I've explained here, but in a move like you've provided here, there's some nice cash made.

[Anonymous]

	Quote:	brownsfan019
	Pivot - nice chart. Here's what I see - if you are short somewhere into that nice down move, you had about 2 WRB's that gave really nice exits. .

B.F., you have mentioned this time and time again: there can be some issues as to which WRB is a good exit. That is, sometimes the first one does not make the "best" target as the market continues in the trade direction.

This is one reason I like the trailing stop method.

Now, one can create a "blackjack" concept if one understands MORE FULLY the wealth of information entailed with WRBs.

Take another look at that previous chart.

The two WRBs that represent "Effort to Fall" are good places to move a stop, but not exit. After these two WRBs, there is another even larger one with ultra high volume, this becomes the one to exit the position on.

Simply, if the WRB is an "Effort to Fall/Rise" one moves the stop to just below/above the low/high of the body. If the WRB is not an "Effort" type of WRB, exit on close. It's simple. It's concise. It's repeatable.

Also, I have tried to stress that WRBs make for good profit targets because they are market generated. And as market generated information, there is a lot going on within them. So much in fact, that as mere exit targets is to belie their overall power and importance. Said power and importance is of course why they make good exits, but it is not their only use, nor their best one.

[brownsfan019]

Pivot - I can appreciate your info and ideas on the subject. For me, as you know, in the spirit of keeping things simple, I just look for visual WRB's to exit on. I have not done nearly enough backtesting and research to be able to say when a WRB is a good exit point and when one is a good reason to stay in the trade. Perhaps you could detail each of those scenarios when time permits.

1) Under what conditions should a WRB be used to exit a trade?

2) Under what conditions should a WRB be used as a reason to stay in the current trade and not exit?

Also...
3) What is the backup plan when a WRB just does not appear, meanwhile the trade is moving in your direction?

[Anonymous]

	Quote:	brownsfan019
	1) Under what conditions should a WRB be used to exit a trade? 2) Under what conditions should a WRB be used as a reason to stay in the current trade and not exit? 3) What is the backup plan when a WRB just does not appear, meanwhile the trade is moving in your direction?

Good questions B.F.

First I would say the answers are a bit tricky. Don't get me wrong, I say tricky because you use constant volume charts. But here are some things I look at:

1. I like the concept of "Effort to rise/fall" from VSA coupled with WRBs. If a WRB is an Effort candle, then I move the stop to just below/above the open of the body.

2. If the candle is very large and has Ultra High Volume and is not an effort to rise/fall or pushing thru supply candle, then one would look to exit. This has to do with possible supply (selling) entering the market.

As previously stated, I do not exit at the WRB I always trail. But if I did exit, this would be the type of WRB that would trigger an exit rather than a moving of my stop.

I know you use Constant Volume Candles so things are different for you. You would have to focus on things such as:

1. Overall Price Action: both in the market traded and related markets

2. different time frames (or in this case, different constant volume levels).

3. What created the WRB? If already in when the news event comes out, you might want to exit on the WRB (initial reaction to the news) rather than use a trailing stop.

Mark is truly the one to answer this question. I hope he will add is input. I would just stress that there is a way to both use a trail and an exit strategy with WRB that is both simple and consistent.

As far as WRBs not showing up. Again, I use the definition of an WRB as a candle with a body that is greater than the three (3) prior intervals. Hence it is possible to have an WRB that does not look large but meets the definition. Simply, it is rare to have no WRB for a sustained period of time. Also note that in an extreme case where there are no good WRBs (visual as you like), then a Wide Spread Candle (WSC) could be used.

[brownsfan019]

Pivot - thank you for sharing once again. Maybe we can get Mark to come on over to this thread...

I may have mentioned this here (or not) but I have also been using time charts as well. Part of it has to do with the fact that each charting software interprets how to construct VBC's differently. MultiCharts has their own way, TS their own way, etc. While I think VBC's are a valid trade charting setup, there are limitations that I think are due to them not being as popular as a time or tick chart. So, just wanted to let you know that I am on a 5 minute ES chart as well, if that helps in using WRB's.

I'll be perfectly honest - I do not know a thing about VSA. While it may behoove me to learn more about it, I also do not want to open a can of worms... As I am sure you know, it's always tempting to learn about something new or different, but as soon as you dive into it, things change... and not always for the better.

I sole purpose of WRB's is to get better exits than what I was doing. And as long as they appear, this is the case. So, in regards to better exits, they have done just that. Now it's a matter of continuing to finetune them.

Knowing that I do have 5 minute charts up, if there's something else you can share, that would be great.

[brownsfan019]

Pivot - I have a question/favor to ask - if you have time, can you create a post on how to interpret WRB's as continuation vs. exiting points in a way that someone (like me) that knows nothing on VSA could understand and possibly put to work? I'll be up front - I really don't have a desire to learn VSA inside and out purely for this purpose. I'm just being honest. But perhaps you can take some of that knowledge and transpose it over in this thread for those of us that like WRB's, but not necessarily looking for a whole new ball of wax with VSA.

Part of the reason for this request is an ES trade from this morning. I'll post some screenshots here in a bit.