[joshdance]

Thanks you two.

With respect to the NFP trade, I appreciate that you two saw things differently than I did. Just for feedback, here's a shot of the action--granted, it's a static picture and things look different in real time, however, it looks pretty much as I recall: big spike up, low volume shallow pullback for a few minutes, and then a secondary push up. The thing is, as you can see from the volume on the bottom, the active buying actually increased all the way up to the peak. I can see the offers hold when I look at the tick chart though. After this of course selling came in, but it doesn't appear too strong. Again, maybe I just don't remember it well or have it framed in my mind that it was a very weak move down. I'm well aware of different volume patterns that can occur at extremes but this doesn't appear as anything unusual; in other words, even as it meandered down slowly, my mind was on continuation and thinking long, because the selling looked weak. In fact, up until the very minute of the open there was no volume, and after the first push down there was actually quite a nice bit of buying. At any rate, thanks for the feedback guys.

2011-10-19_2334 - joshtrader's library

[steve46]

Originally Posted by joshdance »

Are you talking about fundamental "events," such as those news-related?

Yes



At what point would you say that it was clear that selling would continue? After all, we had been in a nice big upswing for 3 days prior, and the move down after the NFP release was quite tame if I recall. Yet you said that you could anticipate the open based on this. Can you elaborate a little steve? I just don't quite connect what I see and what you're saying.

I read the tape...looking at the roll speed, the size on the bid and offer, and in this case I saw the lack of buyers off the spike. Secondly I noticed that they couldn't hold the bid and this was confirmed by the selling tails on subsequent candles down. The VOLD and ADD showed institutions coming in to sell and programs firing off on the sell side. To me it was apparent that participants were going to take profit off of that report.

[wrbtrader]

The one thing you need to be careful with structural reference (market context) is to not use one event only when there are other structural reference (market context) appearing later.

Simply, its very common to have several structural references (market contexts) occurring in the same trading day. Therefore, don't get tunnel vision on one structural reference when there will be others occurring in the same day especially when key market participants consider the same.

[TheNegotiator]

There's another point in there steve. The counter-move although relatively weak compared to the move up, was trending down. If a move like that is to continue, any move back should be consolidation or a pause, not a downtrend. The windfall analogy is definitely right especially on a release which personally I didn't think was mind-blowing(esp given the primary concerns were elsewhere at the time). Failure to follow through and failure to entice buyers back in with lower prices meant these ultra short term players (and maybe those who felt like it was a good opportunity to adjust their positions) needed to exit.

I've tried to show on the chart that how I was viewing it at the time.

[joshdance]

Originally Posted by wrbtrader »

The one thing you need to be careful with structural reference (market context) is to not use one event only when there are other structural reference (market context) appearing later.

Simply, its very common to have several structural references (market contexts) occurring in the same trading day. Therefore, don't get tunnel vision on one structural reference when there will be others occurring in the same day especially when key market participants consider the same.

Thanks WRB, could you give a concrete example of what you mean by different contexts within a single day? Could this be several news events, such as a report being released, and at the same time news from europe, etc.? Technically (non news related), what might this be?

[wrbtrader]

Originally Posted by joshdance »

Thanks WRB, could you give a concrete example of what you mean by different contexts within a single day? Could this be several news events, such as a report being released, and at the same time news from europe, etc.? Technically (non news related), what might this be?

It could be like that in that it involves anything on your typical international economic calendar like what you would see @ Forex Calendar @ Forex Factory, any FED/ECB/IMF event that's being watched by key market participants that's not on your typical international economic calendar, any breaking news or new announcements involving global crisis, technically (not news related) as a reaction to the price actions in correlated markets...any thing that catches the attention of key market participants.

All of these structural references (market context) can occur different times (not at the same time) throughout any given trading day...causing strong continuation price actions, swing points, trends, trend reversals and even low volatility/low volume tight trading ranges. Yet, I don't recommend trying to predict a particular price direction. Instead, market the X on your chart or bid/ask/time & sales quote screen that represents these structural references sort'uv speak and then wait/watch how price behaves (reacts) when it returns to the area of the X.

[steve46]

Originally Posted by TheNegotiator »

There's another point in there steve. The counter-move although relatively weak compared to the move up, was trending down. If a move like that is to continue, any move back should be consolidation or a pause, not a downtrend. The windfall analogy is definitely right especially on a release which personally I didn't think was mind-blowing(esp given the primary concerns were elsewhere at the time). Failure to follow through and failure to entice buyers back in with lower prices meant these ultra short term players (and maybe those who felt like it was a good opportunity to adjust their positions) needed to exit.

I've tried to show on the chart that how I was viewing it at the time.

Yes, agreed, generally on the counter if you believed that the move up had legs you would be looking for buyers to come in right off of that first red candle down (on the second move up)....instead the response was anemic....specifically they couldn't hold the bid, and that is why you see a tail on that next candle...you can see just where they ran out of gas. Any short initiated after that candle was viable (provided you understood why it was happening). From my perspective that "understanding" (the conceptual basis for the move down) is the critical component of the trade.

I don't remember the exact conditions now, but the data that produced the favorable report were thought to be temporary, and so participants decided to leave the field and in the absence of buyers, the market was re-priced to the downside (profit-taking).

[steve46]

Interestingly today's day traded in a similar way to the previous report

Also very interesting was the news of Gadaffi being captured and killed that supported the move up just prior to lunch (NY time)...that news (not reported on the financial stations) came in about an hour ago in contrast to the news about Greek soveriegn debt which they decided to emphasize, probably because they have correspondents there....

Nice rebound off the local low at 1196.50