January 10
Posted 01-10-2011 at 12:49 PM by ondrej237
My analysis of today's price action. As seen from the 100 000 volume chart, price spent most of the time in the lower half of the trading range yesterday (see chart). Pokes above midpoint were quickly rejected and price tested the bottom of the large trading range. This could imply weakness and one should be prepared for the market breaking the range and moving down.
This morning, market opened below yesterdays close, made some LL and LH and then broke out from the range. I would have taken the retracement after the break-out, but then would have been stopped out because price moved above S/R. However, soon it continued in anticipated direction.
Some things to figure out: was the extent of the break-out sufficient to take the retracement? The large trading range was 80 points wide and break-out was only 7 points... Was the volume of the break-out sufficient? Did the volume on the retracement decline enough to justify me to take it? Given the size of the large trading range, should I consider wider stops?
Price then continued lower and hit the predefined S/R level almost to the tick. It then broke through it and retraced, but the volume on the retracement was imo quite high. Price then hovered around S/R level and formed a smaller trading range from 2771 to cca 2754.
I've been quite succesful in spotting these S/R levels over the last couple of weeks. However, I'm not that good in reading the charts and the "push me/pull you" behavior at these levels in real time.
This morning, market opened below yesterdays close, made some LL and LH and then broke out from the range. I would have taken the retracement after the break-out, but then would have been stopped out because price moved above S/R. However, soon it continued in anticipated direction.
Some things to figure out: was the extent of the break-out sufficient to take the retracement? The large trading range was 80 points wide and break-out was only 7 points... Was the volume of the break-out sufficient? Did the volume on the retracement decline enough to justify me to take it? Given the size of the large trading range, should I consider wider stops?
Price then continued lower and hit the predefined S/R level almost to the tick. It then broke through it and retraced, but the volume on the retracement was imo quite high. Price then hovered around S/R level and formed a smaller trading range from 2771 to cca 2754.
I've been quite succesful in spotting these S/R levels over the last couple of weeks. However, I'm not that good in reading the charts and the "push me/pull you" behavior at these levels in real time.
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