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Sledge

Real Time Price Action- Clue to Puzzle?

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So your scenario, I assume, is to buy support and sell resistance?

 

 

Correct, and since price opened well below resistance, the odds were higher that is going to be drawn to support first. Which is what it did, but then it went 5 points lower than 1342... and the fact that it later got back above 42 but then lower again makes it all the more confusing whether or not there actually is support there.

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Correct, and since price opened well below resistance, the odds were higher that is going to be drawn to support first. Which is what it did, but then it went 5 points lower than 1342... and the fact that it later got back above 42 but then lower again makes it all the more confusing whether or not there actually is support there.

 

Support is not necessarily a trampoline, but you're getting ahead of yourself. You say you understand that support is not a line but a zone. So whether price penetrates or not is irrelevant compared to the importance of what it does while it's there.

 

Which leads us to the "selling climax". Where do you see this?

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Support is not necessarily a trampoline, but you're getting ahead of yourself. You say you understand that support is not a line but a zone. So whether price penetrates or not is irrelevant compared to the importance of what it does while it's there.

 

Which leads us to the "selling climax". Where do you see this?

 

About 20 minutes after the open. I've attached another chart where I annotated the bars where I paid most attention to.

es_6.thumb.GIF.0cd321b4ba73c539d4e70a2c305f51d3.GIF

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Fair enough. Now where's resistance?

 

And if you want to work with your charts, click Edit>Copy then paste them to Paint on your hard drive.

 

 

Forgot to say - when you asked me about resistance - that I posted this earlier on:

 

The S/R point comes from the low from the previous day, and the high on the 19th.

 

My prepost levels were (and are) these:

 

support 1342-1344

resistance 1357-1359

potential resistance 1349-1350

 

Pre-market plan was to go long on a re-test on support.

 

I wrote "potential" at 1349-1350, because there's an area of consolidation from overnight there. This can be provide resistance, but it doesn't have to. I'm more convinced about 1357-1359 than this area. But by the looks of it (right now) it is offering resistance... so at least I got something right.

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About 20 minutes after the open. I've attached another chart where I annotated the bars where I paid most attention to.

 

First, all selling climaxes are only potential selling climaxes. You won't know whether or not they were selling climaxes until there's been a successful retest.

 

Second, why do you consider this even a potential climax? Why is the volume any more climactic that the earlier volume?

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First, all selling climaxes are only potential selling climaxes. You won't know whether or not they were selling climaxes until there's been a successful retest.

 

Okay, you're right, there's no knowing whether it is actually thé selling climax, but I was just describing what I felt or thought in real time... obviously it's only 100% sure whether something is a selling climax or not in hindsight.

 

Second, why do you consider this even a potential climax? Why is the volume any more climactic that the earlier volume?

 

If I don't have much reference to how "high" volume is, then I look to the previous day to compare how "huge" the volume really was. That way I have a means of determining what "the average volume" looks like. Next to that, the first bar at the open is usually pretty high volume because the market just opened. Next to the down bar itself there's an upbar next on comparatively low volume. This is usually confirmation of the selling climax.

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All right. Setting aside the subject of whether you are correct in your assumptions or not, your hypothesis is that this is a selling climax, and because it's taking place at what you hypothesize to be support, you should be on the long side.

 

Now what did you see, minute by minute, that supported your hypothesis, and what did you see that did not support your hypothesis?

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All right. Setting aside the subject of whether you are correct in your assumptions or not, your hypothesis is that this is a selling climax, and because it's taking place at what you hypothesize to be support, you should be on the long side.

 

Now what did you see, minute by minute, that supported your hypothesis, and what did you see that did not support your hypothesis?

 

Starting from the selling climax, this is how I observed price. Thoughts and feelings included in the analysis :)

 

(1) the next bar was an up-bar, as mentioned on lower volume and going straight up... => no supply

 

(2) at 1400 there was the news, the high volume on this bar is ignored

 

(3) at 1409 there's decent volume and a wide spread bar but price closes in the middle, looks like there is still some supply in the market left that prevents price from rising

 

(4) next candle, reasonable volume and price goes down... so I'd expect price to test the support again

 

(5) next candle, price tries to rise, but fails to do so and closes at the low, but still not lower than the previous candle: looks like there's already some buying coming in, supports the hypothesis

 

(6) the 're-test bar': higher volume than the previous two bars: but small spread => all the effort from sellers is apparently being absorbed by traders who are buying at this level, otherwise the high volume would see price fall further; instead price hardly moves and the candle closes off the lows, hypothesis very likely

 

(7) at 1421 there's an upbar, on the lowest volume of all... here we go: lift-off: no more supply left and price rises becauses there's no selling pressure, hypothesis confirmed

 

(8) at 1424 sudden rise in volume and wide spread down bar... what the hell?

 

(9) ah, another low volume upbar, perhaps sellers weren't quite flushed out completely in the previous bar and price will rise now, starting to feel some fear...

 

(10) what? how can this happen? wide spread down bar and it goes below the low of the potential selling climax... my stop was there so I'm stopped out... hypothesis apparently incorrect

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.

I've drawn in the "potential" resistance level you mentioned earlier.

 

.

 

.

How does this change your perception of strength v weakness?

 

.

 

 

It now looks as if this:

 

"(3) at 1409 there's decent volume and a wide spread bar but price closes in the middle, looks like there is still some supply in the market left that prevents price from rising"

 

was some sort of rejection from resistance.

 

If that was a rejection, than the candles that I named a "re-test" look like weakness and no buying... :\

 

But then again, if I remove my "support", everything starts to look different.

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It now looks as if this:

 

"(3) at 1409 there's decent volume and a wide spread bar but price closes in the middle, looks like there is still some supply in the market left that prevents price from rising"

 

was some sort of rejection from resistance.

 

If that was a rejection, than the candles that I named a "re-test" look like weakness and no buying... :\

 

But then again, if I remove my "support", everything starts to look different.

 

Price determines where support and resistance lie, not the trader. Finding a point here and a point there and drawing lines across them may give the trader the illusion of finding support and resistance, but that's exactly what it is: an illusion. What matters is remaining sensitive to the flow of information regarding the balance of power between buyers and sellers, not in dithering over trivia that price couldn't care less about.

 

This is not to say that you should make no attempt to locate those areas most likely to act as turning points for price, but dont succumb to nonsense. Use your head. And when price approaches those levels or enters those zones where you think turning points are most likely to occur, you must remain absolutely free of bias so that you can interpret the dance between price and volume, demand and supply accurately. Either that or adopt the biases both of those who are long and those who are short. Argue the case of each simultaneously. And if the windows don't open, stand aside.

 

If bars and closes and so forth aren't working for you, consider trading price. Just for the hell of it, try to determine where strength and weakness lie here during the same timeframe as in the earlier charts:

 

.

attachment.php?attachmentid=5686&stc=1&d=1206566565

 

.

Image6.gif.54bb0dc6caaa9c8474f7aadf97674899.gif

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Price determines where support and resistance lie, not the trader. Finding a point here and a point there and drawing lines across them may give the trader the illusion of finding support and resistance, but that's exactly what it is: an illusion. What matters is remaining sensitive to the flow of information regarding the balance of power between buyers and sellers, not in dithering over trivia that price couldn't care less about.

.

 

True, but - as I posted in my "minute-by-minute" analysis - I had more elements to support the long case than not. And given that price reacted to my line at 1342 in the first place, it was a confirmation of support.

 

This is not to say that you should make no attempt to locate those areas most likely to act as turning points for price, but dont succumb to nonsense. Use your head. And when price approaches those levels or enters those zones where you think turning points are most likely to occur, you must remain absolutely free of bias so that you can interpret the dance between price and volume, demand and supply accurately. Either that or adopt the biases both of those who are long and those who are short. Argue the case of each simultaneously. And if the windows don't open, stand aside.

.

 

I've found that hard to do when trading. Easy when you're not trading perhaps and just standing aside, but when you're actually putting a trade on and you're focusing on elements to contradict your trade, one can always find some. If I look hard enough, there'll always be signals that invalidate a trade, but by doing so, I probably never put a trade on.

 

If bars and closes and so forth aren't working for you, consider trading price. Just for the hell of it, try to determine where strength and weakness lie here during the same timeframe as in the earlier charts:

 

I'm not quite sure what I'm supposed to do with the chart, but I gave it a try... but I'm not sure if this even comes close to what you had in mind.

sw.GIF.d877c7af2a5bf2d87e2b28d3211cba46.GIF

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True, but - as I posted in my "minute-by-minute" analysis - I had more elements to support the long case than not. And given that price reacted to my line at 1342 in the first place, it was a confirmation of support.

 

You had more elements to support the long case because you weren't sensitive to those that spoke against it.

 

As to the reaction at 42, that's fine. But you traded off 44.5.

 

If I look hard enough, there'll always be signals that invalidate a trade, but by doing so, I probably never put a trade on.

 

No, you'd take only the best ones. You have to decide whether you want to trade or you want to make money.

 

As for the chart, I imagine at least a couple of people have been following this. I'll let them take a whack at it, if they can do so without being contaminated by hindsight.

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No, you'd take only the best ones. You have to decide whether you want to trade or you want to make money.

 

I suppose don't need to answer that one...

 

As for the chart, I imagine at least a couple of people have been following this. I'll let them take a whack at it, if they can do so without being contaminated by hindsight.

 

Okay, we can continue this tomorrow or later then. Thanks again for taking the time.

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1320,1332,1340, and 1358. chart attached......

erie

 

my levels for today:

 

1347-1349 (given yesterday's action)

1358-1360 (obvious resistance)

1337-1339 (yesterday's low)

1323-1325 (from the 15th and the 19th)

 

 

Why as low as 1320 erie? and where does the 1332 come from exactly?

 

and do you take the overnight action into consideration when analyzing a chart?

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Why as low as 1320 erie? and where does the 1332 come from exactly?

 

and do you take the overnight action into consideration when analyzing a chart?

 

The 1320 is an important area from earlier on ( you can go back to previous posts and see the charts as well )

The 1332 area, look at the chart, from back to early March the area above the 1332 was an area of price rejection , this may now be potential support. The overnite action is on the chart from previous days and I look at my levels the night before.

erie

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my levels for today:

 

1347-1349 (given yesterday's action)

1358-1360 (obvious resistance)

1337-1339 (yesterday's low)

1323-1325 (from the 15th and the 19th)

 

Ok, looking at your figures, why 1347? The others I can see your point as they are reasonably close to mine and one has to allow for a difference in eyesight :)

erie

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Ok, looking at your figures, why 1347? The others I can see your point as they are reasonably close to mine and one has to allow for a difference in eyesight :)

erie

 

1347 to 1349 is the high of a congestion area from pre-market yesterday. Also, late last night it peaked into that area up to 1349.50 before reversing sharply. So I guess you could say 1349 is the level to beat, but I always define "zones" instead of fixed lines.

 

I hope the difference in eyesight doesn't spoil things for me again...

 

-> Question: given the premarket action at 1344-1345 (price reversed after hanging around there for quite some time), would you now consider that level to be resistance? It's awfully close to 1349 though :\

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-> Question: given the premarket action at 1344-1345 (price reversed after hanging around there for quite some time), would you now consider that level to be resistance? It's awfully close to 1349 though :\

 

No , I think it's more important to note where price opens , in regards to yesterday's close, there is a lot of price above us here right up to 1358.

erie

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my levels for today:

 

1347-1349 (given yesterday's action)

1358-1360 (obvious resistance)

1337-1339 (yesterday's low)

1323-1325 (from the 15th and the 19th)

 

Like I said in a previous post, support was at 1337-1339. These are the horizontal blue lines drawn across the chart.

 

Price opened above support and just went straight lower, like a knife through butter. It stopped around 1332 before going back to the support area, which should now act as resistance. I'm observing how the volume drops off gradually, so this looks typically like a low volume retracement after a breakout, right?

 

Then there's a volume peak that pierces the support level but the bar closes right down, and this is the 'shooting star' short signal I was looking for. The volume is much higher then before, so everything is according to plan.

 

However - and I can't get my head around why this is happening so often lately - price continues higher. I would almost get paranoid, but this would have been the 14th losing trade in a row. I stopped trading for real after 7 though. Perhaps I need to go short when I go long and the other way around. Certainly looks like that could work :roll eyes:

es_march27.thumb.GIF.b24e1a78005f324a65615e210457c04f.GIF

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Like I said in a previous post, support was at 1337-1339. These are the horizontal blue lines drawn across the chart.

 

Price opened above support and just went straight lower, like a knife through butter. It stopped around 1332 before going back to the support area, which should now act as resistance. I'm observing how the volume drops off gradually, so this looks typically like a low volume retracement after a breakout, right?

 

Then there's a volume peak that pierces the support level but the bar closes right down, and this is the 'shooting star' short signal I was looking for. The volume is much higher then before, so everything is according to plan.

 

:

 

Support is at 1332........... resistance is now at 1346.... forget 1337.

 

erie

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Support is at 1332........... resistance is now at 1346.... forget 1337.

 

erie

 

Yes I can see why support is NOW at 1332... after price reversed from that level it's easy to say. But before the day opened I hadn't written this level on my map. Instead I was focusing on price action around 1337-1339...

 

as for 1346, how come you suddenly have that as resistance? couple of hours ago you asked me where I got my 1347 from?

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Yes I can see why support is NOW at 1332... after price reversed from that level it's easy to say. But before the day opened I hadn't written this level on my map. Instead I was focusing on price action around 1337-1339...

 

as for 1346, how come you suddenly have that as resistance? couple of hours ago you asked me where I got my 1347 from?

 

1346 is where price stopped going up today, so far the high for today. It is where price recently turned . That's what real time is all about.One can't see that until it happens. Don't worry keep it up and you will get it......But that doesn't mean price will stop there, it is only potential resistance.

erie

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1346 is where price stopped going up today, so far the high for today. It is where price recently turned . That's what real time is all about.One can't see that until it happens. Don't worry keep it up and you will get it......But that doesn't mean price will stop there, it is only potential resistance.

erie

 

Okay, fair enough. I can definitely see price reacting to that level: there's a rise in volume and the bar closes off the highs. But this probably happens all the time when price approaches resistance, because it's very likely that other traders are seeing this area as resistance too.

 

If I may ask, do you focus only on the ES? or do you look at other things to?

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