[firewalker]

	Quote:	Eiger
	You can't expect the market to turn on this kind of "testing." You need to see: high volume, a large rally, then a test. Until this occurs, so called support and resistance has little to offer in identifying the end of a trend. There was no large rally here. This was an indication of secondary (additional) distribution (i.e., more selling and supply). Viewing it as "testing" is inaccurate. When I look for a change in trend, I don't just look at support/resistance on the last wave; that will only serve to make you a part of the Herd. Background, or context, is key. Eiger

Thanks for your contribution Eiger. I don't agree that looking for S/R makes you "part of the Herd", because I doubt the majority of the herd looks at S/R, but anyhow... And as for your supplyline, I draw these lines in realtime, so I have to go on on what I see at that time. Your line can only be drawn across that swing point 4 days later (on the 10th), by which a reversal might have taken place long before that line is breached.

You said you wanted to see "high volume, a large rally, then a test".
Interestingly enough, yesterday we had all of those three elements - depending on your definitions of "high" volume and how "large" a rally needs to be.

The action in the last hour on the e-minis yesterday looked like a selling climax to me, and I attribute more importance to this since it didn't just occur in the middle of nowhere, but on support from a while back.

Let me show you some charts of the ES, as I think that's the market you trade most. Not that it matters, because the NQ showed a similar pattern.

First we go back and try to find where important buying took place in the past. Important enough to reverse price. This happened from 11-15 April, about two months ago. The middle of this zone is 1331.



Next, we look at the ES action of yesterday (4 hour chart):



Now, let's assume we didn't have support drawn there and we go back to Wednesday. Unless you had your eye on support, a trader would be looking for longs from 1340 I think.



Now let's have a look at yesterday, this is a close-up, albeit a 5-minute chart instead of a 1-minute. Do we have "high volume, a large rally, then a test" and is this alone enough to take a long, or not? Or do you wait for the supplyline to be broken before taking a long?



Perhaps, instead of doing some hindsight analysis - mea culpa - it might be interesting to know what you - or anybody else - would be looking for next. What elements would signal an "end of the trend"? Are we going to wait for a rally back to resistance, before a test at support? Is this an end of a trend of just a temporary change in momentum?