Using Daily Support/Resistance for Intraday Trading

[trader273 10]

In this thread http://www.traderslaboratory.com/forums/104/crude-oil-march-20-a-3631-3.html#post33729

 

I showed that after the move up in crude, a trader should not be surprised to see a move back to the middle of the candle. That level was 107.70. Plotting that level and going to a 15 min chart, you get the following:

 

Just some simple analysis can yield some nice profits. Of course there is much more to consider. Such as:

• Where and How to Enter
  
• Where to put a protective stop
  
• Where to take profits
  
• How close to Support/Resistance does price need to come
  

[james_gsx 16]

I find that plotting intraday support and resistance lines before the day actually helps me quite a bit. Even if I miss the day, when I come home and see how well they worked I am usually surprised. If anything, they can yield nice scalping trades.

 

The other nice thing you have on your chart is a hanging man right at resistance on the daily. This indicates that selling took place in the trend (up) and could have resulted in a nice scalp at least to the low of the candle or however your risk/reward plan is setup. But there are at least two great trades in that one small chart.

[james_gsx 16]

Nice bounce off support on the 15min, and if we were to close the final candle right now it could be a spinning top. If we break resistance we could have a nice double bottom. CL is a volatile contract, so a move like this wouldn't surprise me. It also wouldn't surprise me if it didn't happen

 

[DbPhoenix 42]

Another important aspect of all this which is not mentioned often enough and so often missed is that by trading at the extremes, one avoids being chopped to death inbetween. Once one begins trading off support and resistance, he will find himself making far fewer trades, holding them until their natural culmination, and better resisting the temptation to "jump in" when he knows full well that he missed -- if he did -- the correct entry.

[trader273 10]

This support was right on today.

[trader273 10]

Here is an intra-day look at crude after the all time high was made. As seen on the daily chart the daily candle finished with a large upper shadow, representing sellers coming in. The all-time could resistance.

[SunTrader 10]

I like to think of bars with long wicks in a down move around a support area as more a drying up of selling pressure and not necessarily a large influx of new buyers.

 

Otherwise why is there such a large move down from the previous close.

 

Obviously there was buyers above, but there was still too many sellers to be absorbed till it went lower. It then stopped going much lower once enough weak hands capitulated and got out.

 

Once the move started back up more buyers and short coverers came in and less sellers were inclined to get out or potential new short sellers deciding to wait for a better entry point.

 

Vice versa in other direction, naturally.

[trader273 10]

I like to think of bars with long wicks in a down move around a support area as more a drying up of selling pressure and not necessarily a large influx of new buyers.

 

Otherwise why is there such a large move down from the previous close.

 

Obviously there was buyers above, but there was still too many sellers to be absorbed till it went lower. It then stopped going much lower once enough weak hands capitulated and got out.

 

Once the move started back up more buyers and short coverers came in and less sellers were inclined to get out or potential new short sellers deciding to wait for a better entry point.

 

Vice versa in other direction, naturally.

 

I dont think its possible to tell if the long shadow after a move is either buyers drying up or sellers coming in. I think that is what the guys over in the VSA thread are trying to do, but they post everything in hindsight and some see entirely different things on the same bar. Many have shown time after time in the CC that simple analysis is all that is needed.

[DbPhoenix 42]

I dont think its possible to tell if the long shadow after a move is either buyers drying up or sellers coming in. I think that is what the guys over in the VSA thread are trying to do, but they post everything in hindsight and some see entirely different things on the same bar. Many have shown time after time in the CC that simple analysis is all that is needed.

 

Not everyone who contributes to the VSA thread "posts everything in hindsight". See MyBlog, below.

 

As to whether a long wick signifies a dryup in buying or a rush of selling, that depends on whether the wick is above or below and whether all of this takes place at support or resistance or neither. If there is a long wick, then there has obviously been a shift in balance. If one wants to know who's in control, all he has to do is look at what happened to price as a result of all this effort.

 

What SunTrader describes, assuming I understand his post, is what Wyckoff proposes, that the rally off what appears to be a bottom may be smart buying, stupid buying, and/or short covering. If the latter two, the upmove won't be sustained due to the fact that shorts are buying only to cover and the stupid will throw their shares back onto the market as soon as things begin to go wrong (weak hands). He therefore counsels waiting for the test of that bottom in order to find out whether or not (a) sellers are really done and (b) there are any real buyers out there.

[trader273 10]

Not everyone who contributes to the VSA thread "posts everything in hindsight". See MyBlog, below.

 

As to whether a long wick signifies a dryup in buying or a rush of selling, that depends on whether the wick is above or below and whether all of this takes place at support or resistance or neither. If there is a long wick, then there has obviously been a shift in balance. If one wants to know who's in control, all he has to do is look at what happened to price as a result of all this effort.

 

What SunTrader describes, assuming I understand his post, is what Wyckoff proposes, that the rally off what appears to be a bottom may be smart buying, stupid buying, and/or short covering. If the latter two, the upmove won't be sustained due to the fact that shorts are buying only to cover and the stupid will throw their shares back onto the market as soon as things begin to go wrong (weak hands). He therefore counsels waiting for the test of that bottom in order to find out whether or not (a) sellers are really done and (b) there are any real buyers out there.

 

OK, I'm not going to try and pretend I understood that. Maybe if I spent some time on it I could figure this VSA stuff out, but what is the point? Make something complicated when it needs not to be?? That makes sense. I'll just stick to simple candle analysis since it works and many, including me, have shown trades before the move occurred. Why add all this other "information"? Markets are simple, it's the traders that feel the need to complicate things.

[DbPhoenix 42]

OK, I'm not going to try and pretend I understood that. Maybe if I spent some time on it I could figure this VSA stuff out, but what is the point? Make something complicated when it needs not to be?? That makes sense. I'll just stick to simple candle analysis since it works and many, including me, have shown trades before the move occurred. Why add all this other "information"? Markets are simple, it's the traders that feel the need to complicate things.

 

First, it's not VSA.

 

Second, what's to understand? You bounce off support. If it's serious buying, you get a V reversal, perhaps off a hammer. If it's not, you get a retest of the bounce. If you want to enter off the hammer, that's up to you. Wyckoff suggests that you wait for the retest. That's all there is to it.

[SunTrader 10]

I think it is a matter of opinion as to what is simple and what is complicated related to one's length of market experience.

[DbPhoenix 42]

I think it is a matter of opinion as to what is simple and what is complicated related to one's length of market experience.

 

If you can't put it on a 6x8 card, it's complicated.

[james_gsx 16]

If you can't put it on a 6x8 card, it's complicated.

 

LOL! I love it.