[WHY?]

Dogpile not sure how you determine the days. I come up with different calculations than you do. My software would have indicated to me to sell any longs on any penetration of 1555. Or if shorting - short anywhere near that. The actual number my software produced on 10-17 for 10-18 was 1555.20. At this moment the actual high made was 1555. I still show the market as being weak and at this point of the day it hasn't yet turned the corner and shown any strenght. I would be very careful going long today. If I did I would bail out on any rally that gave me fair to decent profit. Today may well end up a failure to penetrate day. And the general trend is still down. IN such an environment the strategy, as I understand Taylor, would be to short on the buy days on highs made first, and go long on the BV (buying day violations) if made early in the session and sell those long at or near the previous days low. Of course, if the market were to change to strenght then of course ones strategies must then change too. However, at the moment it is weak.

[Dogpile]

I don't think I understand Taylor as well as you do -- nor am I as strict about the rules. thx for the insight, very useful to hear how you are interpreting Taylor. You are educating me on a more strict Taylor discipline and I appreciate that.

As you can see, there was a buy today on a higher low and a sell into the outlined 48.00 pivot. This morning counter-trend strategy worked perfectly. I actually went long NQ for a trade and made good money getting lucky on exit -- but timing it watching ES move into 1548.00... I should have put a limit order to short ES at 1548.00 with wide stop but I have buy-bias at this point after so much selling over last 3 days.

I am thinking of continuing to look long as I am a swing trader and always fading the last big swing, mindful of the key pivots -- and adjusting on the fly as necessary -- with mind on whether we seem to be making high or low 'first'.

As of now, I think this is difficult structure with the 1548.00 resistance above, you need to buy well below 1548.00 to give yourself room to make money on long side so you can sell into that zone. But I think the next BIG move could be up rather than down so I don't want to miss that. I will protect myself with good discipline in case the next big move isn't up.

What do your calculations project as next downside pivot here?

[WHY?]

Originally Posted by Dogpile »

I don't think I understand Taylor as well as you do -- nor am I as strict about the rules. thx for the insight, very useful to hear how you are interpreting Taylor. You are educating me on a more strict Taylor discipline and I appreciate that.

As you can see, there was a buy today on a higher low and a sell into the outlined 48.00 pivot. This morning counter-trend strategy worked perfectly. I actually went long NQ for a trade and made good money getting lucky on exit -- but timing it watching ES move into 1548.00... I should have put a limit order to short ES at 1548.00 with wide stop but I have buy-bias at this point after so much selling over last 3 days.

I am thinking of continuing to look long as I am a swing trader and always fading the last big swing, mindful of the key pivots -- and adjusting on the fly as necessary -- with mind on whether we seem to be making high or low 'first'.

As of now, I think this is difficult structure with the 1548.00 resistance above, you need to buy well below 1548.00 to give yourself room to make money on long side so you can sell into that zone. But I think the next BIG move could be up rather than down so I don't want to miss that. I will protect myself with good discipline in case the next big move isn't up.

What do your calculations project as next downside pivot here?

If prices retrace today off the lows intraday today I see the stopping points at aprox 1546 (1st), 1548 (2nd), 1549.50 (3rd). That is, if it retraces to 1st and goes past it I would look at the next level. If it breaks thru 2nd I would look at the 3rd level as the probable stopping point for the day on a retracement. These could act as intraday shorting points if not made too late in the session. I would watch price action around these points and if there is a little trading here and then it goes dull I might would look at putting out a short. If it goes past all three levels then I would recalculate.

On the low end. My software kicks out 3 prices to me. 1539.82 (1st), and 1537.50 (2nd) and an average low price of aprox 1553

If I wanted an intraday long I would watch price at these first two levels. Again a little trading here then a dull spot I would look to go long. If it sailed on thru 1st I would wait for second. If it blew thru the second I would recalculate my figures for the next stopping points. It is trading below its average low. We can only attempt to anticpate buit we have to trade on the actual action.

From a one day time frame my software still show it very bearish in most areas. However, sometimes that shows up when market is getting ready to turn up. So, only time will tell the tale. On a 2 to 7 day time frame it is still bearish in terms of overbought/oversold. However, on the one day time frame (today) at this point it is turning bullish on overbought/oversold. So, while the intraday off the 1542 area is turning a bit bullish for the moment it still shows overall weakness.

[WHY?]

The weakness shown yesterday blew out south today on 10-19. Once thing to remember about Taylor system is that in his day they didn't have the pre market hours trading ...etc. I am sure that if they would have had it back then his system would have taken that into account. A shorting of around 1549 a little before the market close yesterday (I picked 1549.50 as one of the intraday highs off the low area of 1542 yesterday) and holding overnight would have paid off well today. If there is any adaptation to Taylor original system I would say it should be in this area. Taylor called yesterday 10-18 a SS day and today 10-19 would be a buy day. On a buy day if high is made first you short it early in the session. Then you look to cover the same day on the decline and reverse and go long IF the low was made say within first 2 hours of the session. Anyway by 10:30 this morning 10-19 one would have been out of their short position in the 1525 area and already reversed for a long position with a stoploss around 1516. A rapid sell off like this once the market opens makes for quick plays.

[WHY?]

Well guess I will quit posting here on this thread. Doesn't seem to be too much interest in Taylors concepts. Dogpile has been the main one to show some interest. I am learning VSA to correlate that with what I use, which is Taylor's concepts. I think VSA to be another tool to help anticipate the moves Taylor quantifies.

I might say that the price action today 10-19 (buy day) is what Taylor would term a BU (or buying under the low of the previous day 10-18 which was a short sell day). Notice that 10-17 was a sell day and 10-16 a buy day. What is interesting is a BV (buying day violation-a lower low than the precious day which was a buy day) took place on the 17th. THis was in itself a bit of an indication of lower prices to come. I quote from Taylors book (with parenthesis added for application to ES and this week):

"The violation (BV of 10-17) is in itself, generally a three day or more decline (we see this three days of decline the 15th, 16th, and 17th), and its seems to require a session or two (18th and 19th) to build up a rally that will (begin) penetrate the tops of the selling days-the Selling (day) and (the) Short Sale day." p48

In other words, what he is a saying is that a BV will take another session or two of trading before the price action gets back into the swing of penetrating the high of future buy days on future sale days and the high of sell days on future short sell days.

So, the BV on the 17th in itself acted as a sort of anticipation of at least 1 or 2 lower sessions to come. This is pure Taylor. Just another tool to help anticipate.

[Dogpile]

thanks WHY? -- there is definitely more I need to learn about taylor and you are definitely helping.

you are saying that when the market makes a lower low after a buy day, especially if that low is made AFTER the usual morning 'reversal time', call it the opening 90 mins, then you actually aren't going to get a true buy day until more weakness plays out? You may get an up day, but don't expect the typical up day, up day, sell short day to necessarily play-out. Not sure if that is what you mean but I will read pg 48 and that area this weekend.

Historically, I have just thought about it like, start with a Taylor 2-3 day concept and see if action confirms or refutes this thesis. ie, we have seen a lot of down days lately and I thought we might be due for a day that makes a low in the morning and a high in the afternoon. This was wrong -- but price action clearly indicated this was not likely. We had strong range-expansion off opening price to the downside. We also had no visible pivots from any recent time in which to go long. Note my sheet of high-volume zones had no recent price to provide support for a long-scalp. that is, there was no area to 'test' --- a key, key, key Taylor concept -- that of 'testing'.

Thus, it made sense not to look for a 'morning reversal' today because there was no area of support. I ended up just waiting and catching a good chunk of the afternoon move down when it was clear that all signs pointed to 'trend day'.

I really want to read more Taylor and get to understand more about it --- I will try to add some value by offering up some of my thinking. Hopefully, we can keep this thread going a while longer. Some other Taylor types might start chiming in if we just keep at it a while longer. It is possible although maybe not looking that likely at the moment.

[WHY?]

you are saying that when the market makes a lower low after a buy day, especially if that low is made AFTER the usual morning 'reversal time', call it the opening 90 mins, then you actually aren't going to get a true buy day until more weakness plays out? You may get an up day, but don't expect the typical up day, up day, sell short day to necessarily play-out. Not sure if that is what you mean but I will read pg 48 and that area this weekend.

Say day 1 is a buy day. Day 2 is a sell day, Day 3 is a Short sell day.

IDEAL PATTERN:

The ideal day 1 is to see price trade down early in the session make the low (at this point you take a long position), it reverses and trades up closing on or near the high of the day. That is the ideal setup (for the ideal pattern) for the next day which is day 2. Day 2 it opens making high first and slightly penetrates day 1's high. You sell your longs (you bought on day1) and you are out of the market for the day. It then trades down, then back up, and closes near the high of the day making a good setup for the next day, which is day 3. Day 3 it opens and early in the session trades thru the high of day 2 and this is where you would short it. The selloff comes. You cover on the same day 3.

NOT SO IDEAL PATTERN:

Day 1 opens up early (giving you a shorting opportunity) it trades down but STAYS down. This is not a good setup for an ideal day 2. As matter of fact, the low close indicates it may make what Taylor calls a BV or buying day violation. If you went long on this low (because it was a day 1 and normally you would look to go long on a day one) it would be best to get out of the position BEFORE the close. Why? Because what is anticipated next is not good for your play. The low close on Day 1 is a setup for a possible BV on the next day which is day 2. A BV (buying day violation is when price violates the low of day one, on a day 2, and does so early in the session. So, lets say price does make a BV. It opens low on day 2 and continues lower than the low of day 1. Once the decline stops your strategy is to THEN go long there, having dumped your other previous longs, because it didn't favor your play. What you have effectively done is repositioned yourself in the market since your first long play on day 1 was a weak play. You then wait for a rally off this BV and then you sell those longs. You do so on any rally back up to the low of the previous day 1. That is, your long selling point now is the low of day one. Why? because a possible decline is now indicated. In an ideal pattern you would have carried your original long made on day 1 over to the next day (day 2) and it would have traded up thru the high of day 1 and that would have been your selling point. But seeing price hang near the low on day 1 and it getting close to closing time, you realize it is going to close low. You know it is not in your favor to be holding longs on a day 1 when the close is gonna be low so you dump them to then re-enter on the BV that will probably be made on day 2 (next day). I hope I am not confusing the issue for folks but Taylor shows the ideal pattern and then also had rules for when the ideal pattern just didn't pan out.

Now to answer your question. What you described in your question was a BV. When a BV takes place especially, if trend is turning down or markdown out of distribution is starting then pay close attention to that BV. Just the fact of it being a BV indicates lower prices or a down trend coming. It is indicative of a weak market. Taylor says the market swings high on 3 days (day 1 to day 3). Then comes a decline (swing low) usually made in one or two additonal days. However, sometimes there are variations. In an uptrend it may take 5 days to swing high. IN a downtrend 4 or 5 days too. When you find a BV taking place in a downtrend it is VERY indicative of even more lower prices coming or a LONGER swing low coming. Especially, if it was made in like the first or second day of begining of the downtrend. So, when a BV is made early in a downtrend your strategy must change. The cycle will continue as day 1, day 2, day 3 however, they probably will not be IDEAL (you called it true) Buy, sell, SS days. So, you can anticipate a series of less than ideal days on the horizon coming, because of the BV taking place early in the downtrend. You reason that the downtrend will could last 3 to 5 days more. With Taylor the ideal decline is the high of day 3 (ss day) down to the low of day 1 (buy day). So, this decline or swing low is normally made in 2 days under ideal patterns. But a BV previous to that swing low is indicative that it may be a longer decline. So, day 3 starts after the BV and the decline continues. On the next day in the cycle (day 1) it still continues down. If it closes high the decline has probably been arrested at least temporarily. If it closes low then look for more decline. When you have a series of less than ideal day 1, day 2, and day 3 you get what taylor calls failures to penetrate and BV's. When that happens you must adapt your strategy to market conditions. So, in a downtrend you would be going long on BV's and shorting failures to penetrate on SS days and Buy days. You would forget about going long on buy days because you would get caught in a possible BV the very next day. Taylor always looked to position and re-position himself for a favorable outcome. In short, yes, a BV indicates more "less than ideal" pattern days ahead and alerts you to adapt your strategy. Especially, IF the BV is made at the start of a downtrend. Hope this helps. Taylor is tough to understand, at least the way he writes, makes it hard to follow his train of thought. I have about wore my book out trying to understand the man. I have wondered if he didn't do it on purpose for some reason. I can tell you this he attempted to corner price like no one I have ever seen do. He sought to understand manipulation and to see how it plays out daily in the markets. Todays blast to the downside was engineered that is for sure. We got six days down. I would be looking for the market to head up at least a day or two. Then it might head on down some more from that point. Or, it might head on up. But longs were slaughtered today. Smart money caught every stop loss in sight and hammered on down. Smart money is whistling all the way to the bank.

[smoothdrive]

Hello WHY?

Hold on please!! I'm hear to tell you there are many lurkers here enjoying your posts. I ordered the book on Monday, and my daughter just called me at work to say fed x delivered a package from amazon. So I'll start the book tonight.

I very much appreciate what you have posted here and I look forward to starting the book and kicking around some Q&A if you are so inclined. It sounds like the book is a little difficult to read. So, if you were just starting out with Taylor - how would you go about it? Follow the chapters in order/non-order - read a summary form an outside source etc?

Also, I saw that you have posted at the VSA thread -- Do you think the two methods can work in harmony?

TIA

Gary

Originally Posted by WHY? »

Well guess I will quit posting here on this thread. Doesn't seem to be too much interest in Taylors concepts. Dogpile has been the main one to show some interest. I am learning VSA to correlate that with what I use, which is Taylor's concepts. I think VSA to be another tool to help anticipate the moves Taylor quantifies.

I might say that the price action today 10-19 (buy day) is what Taylor would term a BU (or buying under the low of the previous day 10-18 which was a short sell day). Notice that 10-17 was a sell day and 10-16 a buy day. What is interesting is a BV (buying day violation-a lower low than the precious day which was a buy day) took place on the 17th. THis was in itself a bit of an indication of lower prices to come. I quote from Taylors book (with parenthesis added for application to ES and this week):

"The violation (BV of 10-17) is in itself, generally a three day or more decline (we see this three days of decline the 15th, 16th, and 17th), and its seems to require a session or two (18th and 19th) to build up a rally that will (begin) penetrate the tops of the selling days-the Selling (day) and (the) Short Sale day." p48

In other words, what he is a saying is that a BV will take another session or two of trading before the price action gets back into the swing of penetrating the high of future buy days on future sale days and the high of sell days on future short sell days.

So, the BV on the 17th in itself acted as a sort of anticipation of at least 1 or 2 lower sessions to come. This is pure Taylor. Just another tool to help anticipate.