[wrbtrader]

I use contraction / expansion analysis...a sub-group of volatility analysis to identify key changes in supply/demand.

Expansion Interval --> Contraction Intervals (3 minimum) --> Expansion Interval

Each expansion interval is a volatility spike above/below the prior contraction intervals. Basically I want to see a volatility spike (expansion interval sometimes called the alert interval) and then I want to see the intervals after it began to contract as in small in their range in comparison to the expansion interval. Next, I want to then see another volatility spike (expansion interval) that breakout above or below the range of the contraction intervals...the first volatility spike after the tweezer top or tweezer bottom gets designated as the "confirmation" of a change in supply/demand even though the actual change may have occurred at the tweezer top or tweezer bottom.

However, if someone doesn't like contraction / expansion analysis...they can use the range of the tweezer top or tweezer bottom as the change in supply/demand but only after seeing a "confirmation" price action afterwards.

Also, the change in supply/demand doesn't only imply a change from supply to demand or a change from demand to supply. It also implies supply (it's volatility) suddenly spiking or demand (it's volatility) suddenly spiking...all are changes in supply/demand.

Last of all, I often call these expansion intervals as WRB's (wide range bars or wide range bodies). There's other discussions here at traderslaboratory about WRB's.

M.A. Perry

Originally Posted by enochbenjamin »

Great addition. Thanks.

Can you expand upon how you identify supply/demand areas?? Do you identify them with just the candle formations or in combination with cumulative delta?

[BlowFish]

Nice to see emphasis on price dynamics rather than vanilla patterns. WRBtrader's post reminds me of Dunnigans' one way formula for some strange reason. I guess it's because one of D's sequences is double bottom inside bars (contraction I guess) and then thrust (WRB).

It's also nice to see someone using Jerry's market stats stuff. I have revisited it recently and am even more impressed how robust it has been. On holiday so not been contributing much, but am enjoying this thread.

[jack411]

Originally Posted by enochbenjamin »

Today there were 4 tweezer/shooting star set ups in CL. I only took the last one (+35). The reason I did not take the beautiful shooting star is because the risk would have been too great for my style. I put the SL 1 or 2 ticks beyond the candle that provides the star/tweezer. The reason I did not take the next two tweezers was because price was well beyond the 2nd SD and to me that was in no mans land - scary! The third set of tweezers was also outside of the 2nd SD but it was not so far away and was just coming out. It was a judgement call. Shorted at 8100 with a 8 tick stop. Because it was the end of the day I decided to ride her down to the 1st SD + some. From the way things ended I got out just in time.



A side note on the above tweezers. I don't like em. I prefer for tweezers to have long wicks. However, according to the candlestick sensei Steve Nison "Tweezers are two or more candlestick lines with matching highs or lows." He goes on to state "The tweezers could be comprised of real bodies, shadows, and or doji." (page 88, Japanese Candlestick Charting Techniques)

How have your setups been working lately? Are you still mainly trading these or have you made adjustments? I usually don't watch CL....