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  1. Is Why still around?

  2. Tape Reading Post # 22 PA Tape Reading Ranges cont... Here what happened after tape reading post #21. Volume and price correlated give a clearer picture than just price action alone. In ranges, the volume on the bar in which the top or bottom was made, plus the close of that bar, along with the volume, bar size, and close of the NEXT bar, tells the story about whether price will probally reverse or not. Generally, when price is in a range you want to be selling the highs (or near the highs) and going long on the low (or near the lows) but keeping in mind that sooner or later price will leave that range, either to the north or to the south, and will start some sort of trend or mini trend that will then evolve back into another range...etc. It is useful to look at the size of the bars and count them (how many bear and how many bullish bars) and take note of the volume on which they were made. This helps one to detect which way price is most likely to go when it does break out from a range. volume-price 8.pdf
  3. Tape Reading Post #21 PA Tape Reading in a Range This morning 11/15/2012 we see an example of using these principles in a trading range. It doesn't seem like too many traders are finding this approach useful as I don't see many looking at the attached files. I am starting to wonder if I should continue as it does take time to draw this stuff up and by the time I get one done, with the explanations, the market has moved. So, if it is helping anyone, or if at least they find it interesting, let me know because I could be doing alot of other things. volume-price 7.pdf
  4. Tape Reading Post # 20 Price Action Tape Reading in a Weak Market using the OHLC Range, Immediate Context and Volume, of a TF as the Elements to Read to determine Probable Immediate Future Price Action Tape reading in the early days of course was from a ticker machine that informed the traders of prices and volume. Many attempt to try and duplicate that effort using Time and Sales..etc. Others stitch orders together in an attempt to reveal the big money entering the market. Others just try to determine order flow by watching the action on the Dom. These can all be classified as attempts to "read" the tape and determine future probable price action. Others say it can't be done. They maintain that no one can determine what price will do before it does whatever it is going to do. I think that in some cases that last sentence is correct. However, in most cases we can follow the transactions (price and volume) and make some sort of determination of what price will "probally" do v ery soon. Nevertheless, we all know that nothing is 100% in the markets and no system of trading can win 100% of the time EXCEPT mr DAVT method or the TRO "never lose again" method. The rest of us miserable worms have to try figure out what is going on in the markets and how that may affect us. Now, I use a sort of tape reading off of a chart. Some would call this reading PA. I call it tape reading. Why? Well the ticker tape machine showed price and volume of individual transactions. A bar chart shows the exact same thing except that they have been added together and represented grafically for the time frame under consideration. So, instead of looking at the tape on a transaction by transaction basis you are looking at the tape on a time period basis. In other words, all the transactions have been lumped together (volume and price) for that particular TF. Now when you read many of the old timers on tape reading it is interesting to see that they too look at, and refer to charts, to make their points on tape reading even though they watched individual transactions on the tape. See Neil..Gann..Wyckoff..etc. People like Livermore and Taylor read it more from the numbers in their heads. They seemingly had the capacity to remember these numbers as the session went on and could in fact interpret probable future price action from correlating present price action with these numbers floating around in their brains. As far as we know Taylor didn't use any charts. He just clocked price action in his own way and made references to volume. Now for someone like myself who at times cannot even remember "why" I went to town well that method doesn't work too well i.e. relying on my memory. But IF i can read the tape from time frames that I can represent grafically.. well that is within the possibility of my skills or capacity. Droke did this in his book. Others (like Tom Williams) too have done it. Some call it price action. I prefer to call it chart tape reading. Why? Well..in PA you are looking at support/resistance..patterns (trendlines, flags, pennants and all that stuff)...plus mathematical calculations...usually without much, if any, reference to volume. In fact some PA people go ballistic if you so much as mention that dirty word "volume". Now what if we took volume and correlated it with price action on a TF... couldn't that be a form of tape reading? If the ticker tape was this same correlation but on individual transactions what if we took several of those individual transactions and lumped them together (i.e. their price and their volume) for a particular Time Frame and THEN CORRELATED that information with each other. Wouldn't that be the same, or nearly the same, as what was done on ticker tape or Time and sales? Of course, not exactly the same (especially if one is a scalper) but I think it could still be called "chart tape reading". Anyway, that is what I do and what I call tape reading. It is helpful in Taylor's methodolgy because, for instance, IF it is a SS day and you and you are expecting a penetration of the previous days high (i.e. the Sell day high) early in the session and your bias is to short that penetration at some point, after it occurs, then what can help you determine the best time to in fact short it? That is, how can you determine when the penetration has topped and price will probally reverse. Or if you see a PA reversal how can you determine if that reversal will probally work out and not just be a bull flag of sorts? Enter chart tape reading. Taylor did tape reading live while at the same time keeping his book but he just didn't talk about it much. But you do get hints of it in his book. Maybe he just took it for granted that most folks were already tape reading or were at least aware of tape reading back in those days. Now take PA and "chart tape reading" and put them together and we have what I call Price Action Tape Reading. So, that is what I call myself doing. I am a Price Action Tape Reader. Look at the chart (same chart of 11/08/2012) and see how I would apply PA tape reading to help me detect weakness in the market and IF that weakness will continue. Some will say just look at a trend line. If it is down then there is weakness. That is true. However, during the course of that trendline going down there are several opportunities for that to reverse. How does a trader determine the probabilities of that reversal working out or failing and the old trend continuing? This is where PA tape reading can help. Thus it can help with BETTER timed entries or exits. I may not post much next week as I have a busy week but if you find this useful to you print it out and study it well. volume-price6.pdf
  5. Tape Reading Post 19 Pullbacks vs Trading Ranges and correlated with Taylor When a trend is taking place at some point the price will pull back. All pullbacks are basically just small trading ranges. They are brief pauses in a market that is moving in a trend. If it is a small pullback say 1-9 bars then it may form a flag or pennant pattern and the indication is that the trend will resume or continue. The pullback is, you might say, just a pause in the trend. However, if the pullback has alot of bars say 15 or more then the trend is losing its influence over the price action. That is, the trend is too far back on the left side of the screen to have much immediate effect on present price action. When a trader loses a sense of direction on PA during a pullback then it is probaly best to call the pullback a trading range. The pullback has become (evolved) into a bigger trading range. A breakout will come sooner or later out of this larger trading range, however, that breakout can be in either direction. It can be a continuation or it can be a reversal. The larger trading ranges usually have several smaller bull and bear trends within them. These are smaller patterns within a larger trading range. Some traders may refer to these as "nesting" patterns. These are indicative of the bulls and bears fighting it out. For the most part these are bear and bull institutions exerting their weight and pressure on the market. One side will eventually win and then we will see a breakout of this larger trading range. Taking positions in trading ranges can be profitable also but requires using different strategies that what you would normally use when trend trading. When the pullback first happens, if it is small, and on less volume, or formed on basically equal volume to previous bars, then the probabilities favor a resumption of the trend and a trader would look to get on board when it does resumes. My tape reading post #17 shows many of these small pullbacks. This doesn't mean a trader has to trade every pullback that shows some probabilities of the trend continuing. A trader may choose to simply take a position and continue hold through many pullbacks as long as the subsequent pullbacks indicate a probable continuation of the trend. Once they don't then the trader would look at exiting the position. The chart in post #17 is a good example of many pullbacks a trader could hold through thus capturing larger moves. The volume is a critical factor in determining the determining and assessing the continuation validity of a continuation pattern such a flag pullback. The market is always going up, or going down, or going sideways. That is, it is either trending, or basically in a trading range. It is helpful to back off and look at the larger picture. Why? ..well because you use different trading techniques and tactics when trading trends as opposed to ranges. When you see a trend you need to determine where that trend fits in the larger picture. It could be a trend that is approaching the top of a larger trading range and will probally reverse once it gets there. How does the work with Taylor? Well, Taylor of course is a 3 day cycle method. It is very useful to know the bigger picture of things and just where the 3 day cycle is occuring. Is it taking place in a sideways range which can be accumulation, distribution or even consolidation. Or is is taking place in the markup phase or markdown phase? There are a couple of ways to look at this. Look at a chart with the last 3 days of 5 minute bars.It is easy to see that the break south (red circle) was a break out of a trading range. Since the pullbacks (we have already seen these for the red circle area i.e. PA for 11/8) were on little volume and price was coming out of a sideways range (and prior to that a bearish move on 11/07) therefore, the probabilities favor at least a good move down or some sort of measured move down. This info is good to know when correlating it with Taylors 3 day cycle. Now say it was a buy day in the taylor cycle on 11/08. When it broke south out of the overnight trading range then that would have been the signal to short since shorting is allowed on a buy day IF high is made first. Look at the daily chart in the attached file for an even larger time frame view and some comments on that larger view as it relates to Taylor. volume-price5.pdf
  6. Tape Reading Post 18 Trends and Pullbacks Conditions change. Technology changes (computers do much of the trading with algo..hft) today. On top of that old traders..well die..and new traders come in..Nevertheless, this cycle will ALWAYS be. There will be trends and then pullbacks. It doesn't matter who does them. Look at charts from the 50's. You will see trends and pullbacks. Look at charts from yesterday and today and you will see trends and pullbacks. The pattern is there. It is the nature of the markets or the DNA. Prices simply cannot go straight up and straight down. In any trading session there will be many rallies and many declines. Many trends and many reactions. Taylor has his own way of measuring these. However, Taylor can be improved upon with tape reading skills. It is very useful be able to discern if a rally is slowing down and a possible decline is starting (in a bull market or TF). The it is useful to be able to determine if the decline from off the top of the rally (i.e. the pullback) is a reversal or just a flag or pennant with a resumption of the trend. Volume is useful for helping a trader to determine what is happening in the pullback and if the trend will "likely" resume. The last few posts I have shown some recent price action basically stripped down to showing a trend and the pullbacks and resumption of the trend and finally reversal of the trend. I did not say anything about support or resistance or patterns (flags..pennants..triangles..etc) nor clod the chart with these things even though a trader may find them to be useful in trading. I wanted to show the correlation between volume..trend..pullback.. and how that helps us anticiapte the markets "probable" (nothing is 100% in the markets) next move. Much of the Program Trading is of course done by algo's..etc. You have to be able to determine which side is controlling the market at any given time. If bullish program trading is the dominating one in the market at any given point then a trader would want to be long as the market is going up. If bearish program trading is in charge then a trader would want to be short as the market is going down. The basic question to ask is: who controls the market at this time..the bears or the bulls? There many many of algo's based on differing strategies..etc. It is impossible to "know" them all and what their edge is. But a trader can see enough of what is happening, and who is in control, by watching the volume and correlating that with price. This is tape reading in its most basic sense. The record of the volume and the value of that volume "price" will always show up on the tape. So regardless, of who is trading..individuals..institutions..algo's..HFT..the results of the transactions are in the tape. Of course, it should be understood that there are dark pools and other such activity to keep some of the activity away from the public. Nevertheless, traders do get enough that if correlated properly conclusions can be made about probable price direction. Just like I did in charts I showed. When you see tight trading ranges for quite some time in the ES then HFT's are at work. When price goes below the midpoint of the range they buy. Above the midpoint of the range and they sell. Hundreds of firms are battling it out at any given time. This does not in anyway indicate that one trades each pullback and rally in a bull market or each decline and rally (pullback) in a bear market for the simple reason that a trader may want to trade through some of the pullbacks. However, successive rally then pullbacks..then rallies have a story to tell when correlated with the volume. If more buying ($$$=volume) is happening and price is going up then we know that more of these firms are buying and that is where the pressure is at, i.e. ther is more demand than supply. If more selling ($$$=volume) is happening then price will be going down as there is more supply. This interaction between volume and price gives a trader a view as to where the pressure is at in the market. As a trader you want to "ride" this pressure. The market will only move one way or the other if institutions want to buy or sell at a price that causes price to move. What you see on the tape is simply the "result" of the buyers and sellers transactions. It is volume (the amount of money) not price which best tells the story. Now for some principles: 1) Volume that is increasing in an uptrend or advance with the pullbacks on lighter volume is indicative that the underlying demand is bigger than the supply. This type of price/volume action indicates a resumption of the trend. Usually the pullback will be a flag or pennant. In an advance, when price slows up, WATCH the volume VERY closely. If the volume decreases with price slowing up then that favors a resumption of the trend. This means that even though buying has slowed up there is not a heavy supply offered for sale. If there was heavy supply then on the pullback one would see an increase of the volume. The old saying "never sell a dull market" is referring to when price is in an advance and there is a pullback and volume decreases and activity becomes "dull" then do not short, as this sort of price action favors a resumption of the advance. 2) Volume that is increasing in a downtrend with the rallies (pullbacks) made on lighter volume then that is indicative of supply pressure being greater than buying pressure. This favors a resumption fo the bear trend. The old saying "never buy a dull market" is referring to taking a long position on a pullback (made on lighter volume) in a downtrend. Watch the volume closely in the pullbacks. It has alot to say about a resumption of the downtrend. Although the downtrend has slowed up there is no heavy demand in this senario. This favors a resumption of the downtrend or decline. If heavy volume came in on the pullback then that indicates buying pressure and a possible reversal. If one looks only at price it is harder to ascertain the buying/selling pressures. For instance, if watching just price on a chart, then when a pullback takes place, you don't know the probabilities of that pullback becoming a reversal or simply a continuation of the former trend UNTIL you see it happen on the chart. However, volume will help a trader determine if that pullback is "likely" to turn into a reversal or if it will revert back to the previous trend. Bottom line: a correlation of volume with price in trends and pullbacks can be very instructive. I hope this was demonstrated in the charts I posted in the previous 3 or 4 posts on tape reading.
  7. Tape Reading Post # 17 Price Volume Downtrends Here is a chart of todays price action and some explanations. Good for PATUCA and NIPPA 1-volume-price4.pdf
  8. Tape Reading Post #16 Price Action-volume 11/5/2012 Something to look at. For Nippa, Potuca, Ant, and anyone else that so desires to look at these charts and read my comments. The attached file includes the charts from post #14 and post #15 along with a new chart on page three of the pdf file showing what happened and a few comments about it. When I get time I will write a post or two that encapsulates what I see to be the price action in these three charts. 1-volume-price3.pdf
  9. Tape Reading Post #15 - Volume in Uptrends Finally got a few spare minutes to post this and give a short explanation of what happened after post #14. Here is what happened after post 14. I will talk later about the concepts in another post but this should give patuca something to look at:) Got to travel tommorrow so not sure when I can post again. May be a day or two. 1-volume-price pic2.pdf
  10. Tape Reading Post #14 Volume in Uptrends - I am away from home and haven't been able to post much. Here is a picture of some of the principles on using volume. So, patuca here is a picture... figure it out if you can.. it is from price action today 11/5 in the ES. Around the close I'll try to find time to post a another picture so we can see what happened. 1-volume-price.pdf
  11. Tape Reading Post #13 Some Basic Correlation Between Volume and Price I have been very busy lately and haven't had time to post much. In this post I want to look at the most basic correlation between volume and price that gives us an indication of which side the pressure is coming. That is, is it coming from the demand side or is it coming from the supply side? For every sale there is a purchase so one has to watch price to see the "balance". Basically, if price advances then more demand. If price declines then more supply. It is useful to see what price does on the volume on which the price was made on. In other words, when we see big money in the market then ....just what happens to price? So, large volume (it is useful to see this in terms of money i.e. big money) on price advance the market is tipping it's hand that there is more demand pressure. Large volume (big money) on price decline then the market is telling us that there is more supply pressure. We must not forget that for every purchase there is a sale. Our job becomes to determine the balance of supply and demand. If price advances then the demand is greater. If price declines then the supply is greater. It is the "action" of the volume correlated with the "action" of the price that tells us the story of the demand and supply equation. Again, it is useful to remember that price denotes the "value" of the volume. So, if the "amount" of volume is increasing and the "value" of that volume is increasing we have a clear picture of demand. This (amount of volume) is indicative of more "money" going into stock and the fact that price responds by going up gives a view as to where the pressure is coming from. It is demand. There is more demand than supply. The pressure is coming from the demand side. If the "amount" of volume is increasing and the "value" of the volume is decreasing then we have a clear picture of the pressure coming from the supply side. The price goes down hence we are seeing that the pressure is coming from the supply side. If the "amount" of volume is decreasing but the "value" is still increasing then that indicates price may soon be making at least a temporary top and a pullback may soon be coming. If the amount of volume is decreasing and the value is still decreasing then look for at least a temporary bottom or a pullback. In general,** once a decline starts on increased volume smart money will first be shorting, then covering, and finally going long before the decline stops. When an uptrends starts on increased volume smart money will be buying then selling then shorting. That is why it is hard emotionally to "do" what smart money is doing because they are for all practical intents and purposes, in a decline,.. dropping the knife in the air and as it falls they pressure it down more with shorting, along with public. Stops get hit and drive it further. Fear sets in... then they reach out to catch the knife and brake its fall by covering their shorts then they grab the knife and stop the decline by their long buying. I think there is a thread on catching a falling knife in TL. The point is they are buying before the decline every stops. The public finds that hard to do. This buying will cause a pullback usually a flag of sorts that may then continue the decline or evolve into a sideways range. Then a breakout of the the range in one direction or the other. Studying the left side of the screen, and what happens in the sideways range, helps determine which direction the breakout will take, once it happens.
  12. Tape Reading Post # 12 Volume as Pressure Volume reflects the contracts that have changed hands in a given futures markets for the time period under consideration. When more trading takes place then we see higher or larger volume figures. Volume, you might say, represents the pressure, the force, or the intensity behind a movement or price trend. In general the more the volume or pressure the more a trader can expect the current trend to continue instead of reversing. Once a trend is underway a loss in pressure (volume) generally presents itself BEFORE a reversal in prices on a chart or before a trend change. For instance, in an uptrend the volume will falter then price may go into a small temporary sideways trend (flag..pennant) before continuing on or it may go into a more protracted sideways trend that becomes a larger trading range. The problem is that the lower volume preceded the change in trend but many times shows up in the same bar as the trend change does. That creates confusion as some traders will think that the price changed...then volume changed. However, what has really happened is that the "pressure" changed on the tick by tick level and that preceded the price change. The bar in which the flag showed up is the bar that indicates the volume decrease (after it is fully formed) but actually the decrease was internal on a tick by tick basis and that accounts for the price change. In other words, if the pressure would have continued (in a bull trend) then the price would have continued up and no flag would have formed. But there are exceptions to this as we shall see next. Lets complicate things. It gets confusing when we see upthrusts and buying climaxes. An upthrust is a wide spread up that closes on, or near, the low. An upthrust can be made on low volume or high volume. They are profitable for MM's and are usually engineered.as a money-making manuever. They indicate lower prices or at least sideways tracking. Write that down as it may serve you well to remember this dynamic. An upthrust made on low volume indicates lack of demand. An upthrust made on high volume indicates heavy selling (supply dominating demand). So, here in the latter you have a bar with high volume that indicates a trend is about to change. So what about the concept of reduced pressure preceding the trend change? Here in this high volume upthrust we have high pressure correct? So why is the trend changing or about to change? If pressure drives the present trend then why is it about to change here on increased force? Simply, because, you have good pressure and bad pressure. Good volume and bad volume. That will come in another discussion. Suffice it to say that the CLOSE was the key here to detecting the coming trend change on high volume. I repeat the CLOSE. In tape reading the close is important. It may be meaningless to some traders but in tape reading it has much meaning Price change shows up after volume changes. But it does not always appear that way. The key here is to discern what type of volume one is dealing with and the price context will show that. By price context I mean the dynamics of price on a bar and the bars preceeding that bar. The volume (selling pressure) is what caused the price to close on the low in this upthrust but the low close is what helps us determine the imbalance of the pressures. A buying climax sometimes has a wide spread, lots of volume, even with middle to high closes at times. But the price does not respond accordingly as one would expect by continuing on up. One would expect prices to continue up on increasing pressure wouldn't they if the above mentioned concept is sound? Other times price will start to track sideways. Volume will continue to be high. There may be lots of up bars (bars with closes higher than the previous bar). What is happening here? There is alot of selling and alot buying going on. Can you guess who is doing the selling? What about the buying? Here again, the key is to determine what kind of volume we are dealing with. That will give us an indication of the pressures exerted by the "smart money" and those by the "not so smart money" Can you guess who is likely to win? So a change in pressure preceeds a change in price. But it is imperative to know what kind of pressure one is dealing with. The context will reveal that. Pressure precedes price. But it isn't enough to understand that concept. The "kind" of pressure will determine the price. The context and the price bar will help you interpret the kind pressure being exerted and that in turn will help you anticipate coming prices. I know there are visual learners but I want to first cement the concepts into our minds. It may requires a paradigm shift for some. All paradigm shifts encounter resistance. It is the nature of change. I learned much about this from a little book I found in a book store (that is really guru sounding eh?) back in 1981-1982 called Life Control by Sheldon D. Glass. It can still be found by googling it. Basically, it deals with how we as humans process change and the four phases we go through to cope with the stress that change brings. Any kind of change. That could include changes in our trading. As traders on a public forum we will encounter many concepts that challenge our thinking. Generally speaking, this can be good, but there are times it can become destructive. How many threads have you seen that went by the wayside but started off really really well. I know that much of what I say about tape reading can be challenged. Some of it may even be refuted and declared as heresy. I could be wrong on some things about how I view tape reading. I probally am! I could even change my mind. I might change your mind? I might provoke you to take a harder line against anything I say. Who knows? Lets just try to keep it civil. Potuca will keep us entertained.
  13. Tape Reading Post #11 Price - Close Many traders feel the closing price represents the equilibrium of the buying and selling pressures of the prices throughout the trading period under consideration. On a daily time frame many professional traders take their profit at close to the closing price intead of holding a position overnight. Some traders feel it is the most important price of the day. They see it at a sort of the summary of the day's trading. Other traders think the close is just one price out of many that took place during the trading time period. The location of the close on the price bar can suggest whether buyers or sellers are in control of the bar. When prices close near the high, it can be inferred that buyers won the tug of war on that bar. When prices close near the low, it can be inferred that sellers won the tug of war. When the close is at the center of the price bar, then that indicates that neither side won. The relationship of the close to the high, low, open, and the previous bar's close is also useful for indicating the buying and selling pressures. If the close is greater than the open then the bar is a bullish bar. If less then a bearish bar. Nevertheless, that should be compared to the close's relationship to the prior bar's close for a clearer indication of the bearish or bullish pressures. If the present bars close is greater than the previous bars close then the present bar can be called an up bar or bullish bar. If the present bar's close is less than the previous bar's close then the present bar can be labeled a down bar or bearish bar even if as an individual candlestick bar it is bullish. So, even if just the present bar's price action say indicates bullishness you will want to compare that to the previous bar's close to make a better determination. Why should the prior bars close also be a determining factor in deciding if the present bar is bullish or bearish? Lets say the previous bar's close on the ES was 1430.00. The present bar's open is 1438.00 and the present bars close is 1434.00.. The present bar on its own PA would be labeled a bearish bar. However, it closed higher than the previous bar's close of 1430.00. So what does one do in such a case? Generally speaking the present bar could be relabeled as a bullish bar simply because the it's close was HIGHER than the previous bars close. Of course, it doesn't hurt to also look at the context in which the relationship between the two bar's closes takes place. The point is the bullish and bearish pressures have to be looked at on more than one angle and a determination made as to which appears stronger. A candle stick that on its own shows up as bearish could actually become a bullish bar when you compare it's close to the previous bar's close and to the context in which it is found. When a bar close is lower than it's high that difference can be viewed as "selling pressure". The bulls were not able to maintain sufficient buying pressure to keep price that high all the way into the close. Sellers came in and pushed the price down from the high to the close. The distance they were able to push it down by the time the close happened is important too. Was it pushed down slightly or was it pushed down to near the bottom of the range? The difference between the low and the close can also be seen as reflective of the buying pressure. The sellers were unable to keep the prices pushed down and before the bar closed buyers came in and pushed the prices back up off the lows. The distance they were able to do this also, again, indicates the amount of buying pressure. The close should be analyzed in reference to the range of the bar and also to the volume on which it took place. In addition, did the PA that led to the close take place quickly or was it a slow move as the bar was ending (time)? In an uptrend a close on a volume spike at the upper end of the range indicates higher price on the next bar but if the close is in the middle or lower part of the range on the volume spike it may be a sign of weakness. In a downtrend the reverse is often true. A middle or upper range close is bullish and a middle to lower range close is bearish. The close also indicates whether a bar is an up bar or a down bar and the extent of the buying or selling pressure balance or imbalance at the time of the close. This information gives a trader a better view for probabilities of the succeeding bar being a bearish or a bullish bar. The spread coupled with volume and the close can indicate what the smart money is doing. It then becomes a matter of joining them. For tape reading purposes I think the closing price carries more weight than say just ANY of the other prices that take place on the bar. Especially, when it is related to volume. Others think different. In terms of Taylor trading the close is interesting because it can really confirm the bias. For instance, a low close on a buy day indicates a possible BV being made on the next day of the cycle (i.e. the sell day). So, before the market opens one is anticipating a long opportunity early in the session. A high close on an SS day is indicative of a shorting opportunity right out of the gates on the next day (i.e. buy day). In the first instance you will see more of this type of PA in downtrends. That is, more BV's in downtrends. Just think of all the Taylor cycles and in your mind try to figure out how the close of the previous day could help you anticipate the next day's cycle. Another example. A low close on a SS day could well indicate a lower low being made early in the session on the next day (buy day) so one would be watching the PA really close early in the session to take a long position. A low close on a sell day especially in a downtrend would indicate a high probability that there would be a failure to penetrate the high of the sell day on the SS day. So, if it does in fact trade up early in the session on the SS day in such a case you would expect that the odds favor shorting a lower high. These are just some of the examples of how the low helps confirm the cycles or indicate when there are other probabilities. The close is indeed important and offers much information.
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