Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

aquarian1

Trend Change or Retracement

Recommended Posts

I can't understand all these discussions about volume.

 

If one perceives the market as an auction, price alone shows result, an achievement. Volume shows effort. Of course the achievement is what matters the most, but volume shows effort needed to accomplish this achievement.

If one watches an auction, watching both the achievement (result) and the effort helps to gain a better picture of what's going on in minds of the other traders.

An auction is a series of tests for demand and supply. Volume (effort) shows seriousness (conviction) of the traders. Changes of effort -- watched together with the achievement -- show shift in this conviction. They show shifts from conviction to hesitation, from hesitation to resignation or even to fear. Or the other way around.

But when interpreting volume, one must acknowledgle the volume only for what it is and not to use it as a mechanical indicator. One must never separate it from the achievement and from a context of this achiement.

 

And maybe that's why so many people don't understand it, don't want to use it or don't know how to use it. Maybe they seek mechanical or even magic interpretations like "High volume on a down bar signals strength", but thay fail to see what it means within the current auction.

 

My view is a view of a beginner who doesn't even trade live yet, but I think both traders and aspiring traders are divided into two groups. One seeks for merely a statistical advantage and doesn't care much about the logic behind it. The other one cares primarilly about the logic and understands the statistical advantage only as a result and proof of this logic.

 

And I think if one counts himself into the latter group and if the logic he builds on includes dynamics of auction process, he shouldn't disregard volume.

Share this post


Link to post
Share on other sites

I attach a screengrab of my 5m cash S&P with the new generation indicators and whilst it is not the 'future' chart you showed, it is very similar. I thought all the indicators below your chart were a bit complex for a 5m chart, too much analysis required.

There is not one indicator that will do what you need, but if you concetrate on divergence (always the first signal for a move), then supports or resistances (to act as stop should the trade go against you) and then you will get a better feel for whether it is a reversal or a retracement.

You can only detect this after the peak or trough but it does not matter as you will have detected the change in the trend and you always follow the direction of the trend.

Stay safe in your trading.

TEAMTRADER

"Trade what you see and not what you hear or hope"

5aa70f0742867_SP500CASH.thumb.JPG.498435f44f1466aa4351406f3b8005e6.JPG

Share this post


Link to post
Share on other sites

All this talk about the use of Price AND volume is silly.... volume is meaningless... for every "up" or "down" move on high volume (supposedly representing buying/selling "strength"), you can look at any chart and find a corresponding price move on "low" volume-does this mean that a "low" volume price move was made on buying/selling "weakness"? Of course not... breakouts from S/R lines can occur on high AND low volume- if you don't believe me just look at any chart. Up and down trends can start on high OR low volume-based breakouts or bounces of S/R areas.... I don't know how many times I've seen a P/V guru mark up a chart pontificating about the importance of high volume when on the same chart a huge price move or S/R breakout occurred on relatively "low" volume, yet the guru would ignore these price moves... why? I suspect because "low" volume price moves don't fit into the guru's mindset of what causes price to move.... all I know is that until "volume" can be broken down specifically into categories of whose buying/selling because: 1) they want to enter the market, 2) exit an existing trade for profit, or 3) exit an existing trade due to a loss, then volume otherwise has no usefulness and can be thrown onto the growing scapheap of useless indicators... maybe I'm wrong, but my account tells me otherwise...

Edited by davelansing
spelling!

Share this post


Link to post
Share on other sites

Volume cannot be meaningless unless one also argues that trader behavior is meaningless (which some people do). On the other hand, it can be "meaningless" in the sense that a foreign language is meaningless to one who doesn't understand the language. Is it "necessary"? Of course not. But then neither is a price plot.

 

If one views volume and volume "bars" as indicators, he will likely not have much success with it/them and may as well not plot it at all. If, however, he uses it to ferret out traders' motives, it will at the least serve as confirmation for what he already suspects may be true.

 

For example, using the chart I provided in my first post to the thread (#2), I've plotted the same support level. Until one gets there, the volume is of no particular trading significance, showing only that trading is active rather than dull.

 

 

attachment.php?attachmentid=12474&stc=1&d=1248694992

 

 

However, as price approaches support, buyers step up to the plate in larger numbers in order to retard or even halt the decline (the first set of arrows). How does one know that the buying pressure is greater than the selling pressure? Price stops falling, at least for the time being. Sellers then continue the pressure, though not as heavily (price resumes its decline though on lighter volume). Buyers on their side continue to attempt to support price at this level, though they don't have to try as hard (again, volume is lighter here), and they finally succeed in halting the decline.

 

At this point, sellers have pretty much sold what they wanted to sell (otherwise, volume would be higher and the push-pull would continue). When this level is tested again at 1100, volume is lighter still, though buyers have the upper hand, evidenced by their ability to turn price and subsequently advance it with relatively little effort (note that when price revisits 63, there's practically no volume at all; sellers are literally done).

 

Does one have to know all this or understand what's happening in order to make a successful entry? Maybe not. But is it helpful? To those who are interested in it, yes, and they are generally able to make an earlier entry with a tighter stop and assume less risk in the bargain.

Image1a.gif.eab7b643a41982e5430c8d6feb807c31.gif

Share this post


Link to post
Share on other sites

DB, I will respectfully disagree with your assessment that "buying pressure" comes in to stop downward price movement.. even on your chart above, just before the 11:14 bar, price bounces off support on relatively low volume (relative to the bars you've pointed out with the arrows...)... my argument is this... for every significant bar movement associated with high volume "buying pressure" or "selling pressure", you can find an equal number of bars with low volume that have bounced off of S/R lines to start new trends... and how many times do you see a bar with high volume and price doesn't significantly move up or down (i.e. churning?)... maybe we should define "buying pressure" and "selling pressure" without associating the volume with numbers... which means that using volume to define price movement is an "after-the-fact" assessment...

 

As always, just my 2 cents.... BTW, DB, I've learned a lot regarding price action by reading your blog and your posts on the ET forum...

 

Dave

Share this post


Link to post
Share on other sites

Well, the main reason fro trading is to make money so as long as you both are making money from your differing systems then stick with what you know.

This is how my chart called this and it agreed with the support show on DB's chart.

Having said that the attachment part is not operating on the site. Imagine the line!!

TEAMTRADER

"Trade what you see and not what you hear or hope"

5aa70f0761efb_SP500CASH1.thumb.JPG.14d6db9be470a4c5b3bca4cc63ee7ff3.JPG

Share this post


Link to post
Share on other sites
DB, I will respectfully disagree with your assessment that "buying pressure" comes in to stop downward price movement.. even on your chart above, just before the 11:14 bar, price bounces off support on relatively low volume (relative to the bars you've pointed out with the arrows...)... my argument is this... for every significant bar movement associated with high volume "buying pressure" or "selling pressure", you can find an equal number of bars with low volume that have bounced off of S/R lines to start new trends... and how many times do you see a bar with high volume and price doesn't significantly move up or down (i.e. churning?)... maybe we should define "buying pressure" and "selling pressure" without associating the volume with numbers... which means that using volume to define price movement is an "after-the-fact" assessment...

 

 

Yes, as I said, "note that when price revisits 63, there's practically no volume at all; sellers are literally done". As for "buying pressure" not coming in to retard or halt the decline, if it didn't, then price would continue to decline.

 

As for low volume or high volume, volume is nothing more than a record of participation. What matters is price movement. If the trader couldn't care less about the extent of participation in the move, then there's no reason for him to pay any attention to volume/trading activity at all. As to how helpful it can be in real time, one has to view it in real time, when the price and volume bars are moving together in concert.

Share this post


Link to post
Share on other sites

First I would like to thank all of you for your contributions.

I will try to respond individually as well.

 

Originally I was toying with posting a simplified chart to clarify what I had intended by by question, but I thought that most would understand I was asking a more general question and decided to not waste time as I already had my end of the day printed chart.

 

Perhaps I should have posted my simplified chart with the original question and without any indicators on it so as to better focus the question.

 

I am not closed to new ideas and certainly a few have come forward!

Thank-you all.

 

Rephrased and simplified.

"Is the day going to be a zig-zag day or a V day?

DAYS.JPG.d04748ce56bcb7248047143b1b0de1ef.JPG

Share this post


Link to post
Share on other sites

“At point A is there a way to tell that the balance of the day will be up?”

 

Your question is an interesting one. After all, what trader wouldn't want to know when a trend has changed? While I can't answer your question exactly, I think I can help you stay in a trade until the trend changes direction.

 

I have recently discovered some valuable indicators. Take a look at the attached .jpg file. Using StochasticFast (34,3) and DirectionalMovementIndex(5,2,2,5), you can get a very good idea of the strength of the trend. I will explain.

 

Use the following rules:

 

1) When FastK (Yellow) drops below FastD (Blue), and DI+ (Red) is below DI- (Green), and the ADX (Yellow) is rising, you have a strong Downtrend.

2) When FastK (Yellow) rises above FastD (Blue), and DI- (Green) is below DI+ (Red), and the ADX (Yellow) is rising, you have a strong Uptrend.

 

While I am still testing this combination of indicators, so far I have made a lot of "money" in my paper trading account.

 

I trade with thinkorswim, but these same indicators could be set up with other brokers, as long as they allow you to change the parameters on the indicators. Using StochasticFast with K period of 34 and D period of 3, and DirectionalMovementIndex with ATR length of 5, DI+ length of 2, DI- length of 2, and Wilders length of 5, you can duplicate the same results I get. Try it, and let us know if it works for you.

 

Had you followed these indicators on Friday, July 24th, and bought Puts and 9:45 AM and sold them at 10:15 AM, and then bought Calls at 12:15 PM and sold the Calls at Market Close, you would have made significant profit. The indicators help you to stay in a trade with confidence, as long as the ADX keeps rising. While the candlesticks will often drop down, that rising ADX keeps you in for big profits.

 

But make sure you don't jump the gun and get into a trade until all 3 of the elements of each rule are true, or you'll get into trouble. Yes, you'll miss some of the movement, but let these indicators tell you when the trend is strong and when to get in and get out, so you'll make money.

5aa70f0833076_July242009TrendChangeExample.thumb.JPG.f071aa437a8ccd8441425adabfffba39.JPG

Share this post


Link to post
Share on other sites
Is the day going to be a zig-zag day or a V day?
This is not the right place to ask such a question. You need to visit an oracle for that.

In other words, if you are not a clairvoyant there is no way to tell that in advance. You must learn how to spot the reversal in real time, as it occurs. If you know how to determine Support and Resistance, then you can anticipate a level or area where the occurence of reversal is more likely. But that's all.

Share this post


Link to post
Share on other sites
Here is another quote I am fond of:

 

"Even if it were possible to prevent the gullible from being led down the garden path, one would first have to determine what is or is not a garden path, then determine who is or is not qualified to prevent the gullible from walking it"

 

Though I am unable to validate the wisdom of its author.

 

There are many ways to get to the end of the garden path. The simplest is to simply walk down it. Or you can buy a compass an altimetre a rocket pack and jet off, to your nearest helipad take a chopper to your closest airport, fly to chile, follow the high andes down the spine of S America, catch a slow boat to china, take the trans siberian express to central europe.........snipped for brevity......and finally take a taxi to your garden gate where you will find the end of the path.

 

Some methods will get you where you need to go but they are akin to the second journey. Some methods are as simple as following the garden path. Some journeys are capable of being taken by a 9 year old unsupervised (see elsewhere on TL for examples) Some will be incompleteable by all but the hardiest of souls. It all depends which is more important to the individual, the journey or the arriving.

 

Personally I would be wary of any approach that uses a lingua franca that is shrouded in incorrectly used pseudo scientific terms to lend gravitas all at the expense of clarity of communication. I would (always) be wary of approaches that use the word 'always' a lot, especially when in reference to what price might do next. Undoubtedly this will engender frustration in mere mortals who do not see the future.

Share this post


Link to post
Share on other sites

 

IMO, the most reliable indicator for determining these beginnings and endings (trends) is price and volume. But moreso volume. Used together these present a formidable combination that allow the trader to see how the market operates and migrates from trend to trend. All trends have the same beginning and ending. The fundamental principle of determining whether price is moving in a dominant direction or non-dominant (retrace) is volume and the sequences that volume undergo to produce price movement and a trend.

 

Volume is not a static variable just as price is not static. The sequences of volume are sometimes explained with a simple notation:

 

(B2B 2R 2B) - Where the Dominant Trend is up

(R2R 2B 2R) - Where the Dominant Trend is down

 

 

or X2X 2Y 2X - when viewed on a time scale it would appear as diagonal volume rays tracking the movement of volume like this:

 

\ / \ / where /=X and \=Y; so applying this to our Dominant Trend we can see that for an up trend we will see the following behavior:

 

A new trend is established with decreasing black volume (\B) as it approaches the existing resistance point (Trendline). Price then breaks out of this resistance on increasing volume (/B; now B2B in the sequence). Once this occurs and is completed, price will begin its retrace which is signified by (\R; now 2R in the sequence) and then return to dominance (/B; now 2B in the sequence) - B2B 2R 2B.

 

All Markets are fractal in nature and this sequence (X2X 2y 2X) occurs on all fractals. All fractals undergo these sequences as the market forms trends within trends within trends. When all of these sequences have completed on all fractals the existing trend is extinguished and a new trend forms.

 

Many people choose to ignore this truism. Truth can be intolerable at times.

 

Best wishes.

 

Are you being ironic when you introduce this as a simple notation? If Anyone wants to read about this simple sequence I would recommend Rollo Tape (a pen name of Wyckoff) or Humphrey Niel.

 

This is a great example of pseudo technical mumbo jumbo obscuring simple concepts rather than aiding them. Volume tends to rise when price is moving with trend and Volume tends to fall with corrections. When you get an increase of volume on a correction beware when you get falling volume with advancing price beware. The other important concept is the volume climax as this model does not cater for this I will leave that aside too.

 

Of course if you like making up mumbo jumbo lets call rising price Tuesday and Falling price Wednesday and Rising volume April and Falling volume June

 

Then TA WA TJ WA TJ shows a potential change of trend up to down and TA WJ TA a retracement.

 

This imho is a far superior annotation to the one proposed by ehorn (no serioudly it is!)

 

If you look at the couplets I have proposed they have absolutely the same meaning regardless of context they are consistent. You will see the one proposed by Ehorn change with the context of uptrend or downtrend....no wonder people get confused...absolutely daft).

Edited by BlowFish

Share this post


Link to post
Share on other sites
This is not the right place to ask such a question. You need to visit an oracle for that.

In other words, if you are not a clairvoyant there is no way to tell that in advance. ...

 

Hi Head,

 

I visited the oracle. After making my donation of a silver dinar (you pay first), I was told:

"The God favor you. You shall find that which you seek."

 

Pleased with the counsel, I turned to leave and on the arch above the marble doorway was written,

"If you believe a task is possible or if you believe it is not, you are right."

 

The sunlight sparkled upon the Aegean sea and in the blue sky above, I noticed 3 white doves. One of dropped a sprig of laurel at my feet.

 

-----

In another thread the title

"And then There Were Three..... Breakouts, Retracements and Reversals."

is but another way of asking the question (for a trend change is a reversal)

 

The very first poster to this thread said that it is possible:

Sure. ...

[/center]

 

For you to declare:

"This is not the right place to ask such a question."

is both overbearing and negative.

Let us keep the discussion friendly.

 

Many people have offered good leads.

 

happy trading

DINAR.JPG.69db0093c7b7e2edf216c78377b0abaf.JPG

Share this post


Link to post
Share on other sites

I am sorry that my post was overbearing, but that doesn't change the fact that it was true. At least in relation to the post of yours which I quoted.

I mean that you can't predict if any particular day is going to be a V-day or whatever day. If you know how to find Support and Resistance you have levels or zones where reversal (or trend change, as you call it) is more likely. If you focus on S/R important enough, then you have a good chance that price will go quite far from there before returning, if returning at all.

But finding S/R is not enough. Then you need to watch how traders behave when they approach, reach or breach that level. You need to learn how to read in their minds to see if the level will likely hold or not.

 

And this is not a topic for a post but for a book. If you are interested in the subject, that is how to find S/R and how to read traders' behavior at these levels, then read stickies in Wyckoff Forum and/or DbPhoenix's Blog.

Share this post


Link to post
Share on other sites

 

The very first poster to this thread said that it is possible:

 

 

You appear to have misunderstood my post. In its entirety, you asked if there was a way to tell if point A marked an intraday trend change. I provided a chart which showed support and where that support came from and how trading that support correctly would enable you to take advantage of the trend change.

 

In other words, if you understand trend and consolidation, if you understand trading ranges, if you understand the support and resistance that result from these ranges, and if you understand how to read traders' behavior as they approach these levels of support and resistance, THEN it is possible that you will detect these reversals and trade them profitably. But none of this has anything to do with indicators or moving averages or anything that is in any way complex. It needn't even involve volume, though if you wanted to do so, I showed you how to do so in a follow-up post (#29).

 

If you elect to go the indicator route instead, then the answer to your question is more likely no, it probably isn't possible.

Share this post


Link to post
Share on other sites
You appear to have misunderstood my post. In its entirety, you asked if there was a way to tell if point A marked an intraday trend change. I provided a chart which showed support and where that support came from and how trading that support correctly would enable you to take advantage of the trend change.

 

In other words, if you understand trend and consolidation, if you understand trading ranges, if you understand the support and resistance that result from these ranges, and if you understand how to read traders' behavior as they approach these levels of support and resistance, THEN it is possible that you will detect these reversals and trade them profitably. But none of this has anything to do with indicators or moving averages or anything that is in any way complex. It needn't even involve volume, though if you wanted to do so, I showed you how to do so in a follow-up post (#29).

 

If you elect to go the indicator route instead, then the answer to your question is more likely no, it probably isn't possible.

 

Hi phoenix,

 

I don't think I misunderstood your post. My original post started with:

"I have a question I am looking for help on.

 

Has someone found a reliable indicator, or combination of indicators, or some other way, that from their personal trading experience can tell if an intra day direction change is a trend change as opposed to a retracement?"

 

You answered how you felt was most helpful - which was or some other way and I appreciated your post and subsequent ones. You offered your solution and that is positive. My question did not close out price action only, or indicators, or any combination.

 

re:

"I provided a chart which showed support and where that support came from and how trading that support correctly would enable you to take advantage of the trend change."
That is great. Of course, my provided sample day was only one example to clarify my meaning.

 

As I posted, I appreciate all positive responses. (They are easier to profit from if they are not pushed as the only way.)

 

Thales offered;

"My advice to the original poster is this: Dedicate yourself to removing all indicators from you chart and spend two and half months really focusing on learning to read price action. If, after two and half months of studying price you are still unable to trade profitably, then you either do not have the ability to read price (which is doubtful, even a child can tell up from down from sideways), or (and this is more likely) you are psychologically unfit for trading, and you must seek to understand how your fear is controlling your trading rather than your knowledge of price action, and learn then to control your fear."

 

{so we have;

"Dedicate yourself","

"even a child",

"still unable to trade profitably",

"psychologically unfit"

- all emotive phrases and basically saying

"my way or the highway".

 

I am unclear why Thales can make judgments about someone he has not met or how this encourages others to share their ideas. If one has fundamental leanings they need not be foisted upon others}

 

I do not see this type of emotive battering in the thread I refer to above. Might this be because it was "the approved" price only area of the board?

 

Is it the exact same question

 

If I had realized how divided this board was and how argumentative, I would have removed all indicators from the example chart I included. Perhaps I would have been best just to post the question.

 

However, it is not an outrageous question and similar questions have been posted. I wanted everyone who had something positive to add not feel intimidated out of posting.

 

One person may feel a task is impossible (for them) and that's perfectly all right. But they need not shut down others along the lines of "well he already said it can't be done - so I better not post my idea or suggestion". This is not helpful.

 

No doubt Edison was told many times the electric light could never be made - that it was impossible. And recording a person's voice - he was accused of being a fraud. The list goes on and on.

 

It is very hard to achieve something if you start out with the idea that it is impossible.

 

A much better post would be:

"in my opinion it is very difficult to determine what you are asking. However price support congestion and price/volume response may offer the most fruitful area of investigation."

or

"From my experience, I have not yet solved the question you are posing and I feel that the task may be so difficult that I have given up trying.. however you could try looking at...."

 

In short, a closed statement of what can and can't be done is not helpful and I posted the question for helpful ideas.

 

Happy trading

Edited by aquarian1
typinging error 'other' 'offered' , would to who

Share this post


Link to post
Share on other sites

What thales does or does not "offer" is irrelevant to your quoting me as saying that what you want to do is possible, when my post in its entirety said that it was possible under a certain set of circumstances. I did not say that any other way was impossible.

Share this post


Link to post
Share on other sites
Thales offered;

 

{so we have;

"Dedicate yourself","

"even a child",

"still unable to trade profitably",

"psychologically unfit"

- all emotive phrases and basically saying

"my way or the highway".

 

I am unclear why Thales can make judgments about someone he has not met or how this encourages others to share their ideas. If one has fundamental leanings they need not be foisted upon others}

 

I do not see this type of emotive battering in the thread I refer to above. Might this be because it was "the approved" price only area of the board?

 

Nobody except you is being emotive here. If you ask a question, it is likely that people will give advices based on their own experience and their own way of trading. That's no foisting.

Just for your info, Thales has a 9 year old daughter who is able to trade profitably off price action. So as a fact, even a child can do it. Trading can be simple. It is easier for children, because they are not so psychologically unfit. They have lesser ego, lesser fear.

As a matter of fact, most people are psychologically unfit for trading and they need to learn the proper mindset along with learning the technical part of trading. And in most cases it is harder than the technical part.

So I guess Thales is not judging you personally, but speaks in general. And if you take advices and facts as battering, it's only your fault. If you didn't focus on whether someone is attacking your ego or not, perhaps you could better focus on the subject of the message and eventually take some advice from it.

Share this post


Link to post
Share on other sites
I have a question I am looking for help on.

 

Has someone found a reliable indicator, or combination of indicators, or some other way, that from their personal trading experience can tell if an intra day direction change is a trend change as opposed to a retracement?

 

My advice ... is this: Dedicate yourself to removing all indicators from you chart and spend two and half months really focusing on learning to read price action. If, after two and half months of studying price you are still unable to trade profitably, then you either do not have the ability to read price (which is doubtful, even a child can tell up from down from sideways), or (and this is more likely) you are psychologically unfit for trading, and you must seek to understand how your fear is controlling your trading rather than your knowledge of price action, and learn then to control your fear.

 

You asked a question, and you asked us to base our answers on our own personal trading experience. I provided you with advice, based upon my own experience, that I wish someone would have given me many years ago when I was looking for an indicator with just such capabilities as that for which you currently seek. I stand by it. I think it sound. It was friendly advice, and not a demand. If you find it of no value, or incredible, that is fine.

 

By the way, I do find both your recent behavior, as well as the targets you selected at whom to direct your ire rather curious. I trust you believe that you may have found what you have been looking for, and I wish you well with your journey.

 

Best Wishes,

 

Thales

Share this post


Link to post
Share on other sites

Retracements often are less steep than the trend (but not always).

Retracements tend to have diminishing volume where trends tend to have increasing volume (but not always).

Retracements may have 2 'legs' (there is a retracement within the retracement) (but not always).

Retracements often turn into ranges at the end of a trend (but not always).

Retracements should not break the last 'swing point' of the trend or the trend may be over (but not always)

 

The important thing is being able to recognise what is happening. If you cant recognise then a set of 'rules' might help. Numerous people have provided 'frameworks' to do this. Probably the simplest to apply consistently are those based on plain price action.

Share this post


Link to post
Share on other sites
I have a question I am looking for help on.

 

Has someone found a reliable indicator, or combination of indicators, or some other way, that from their personal trading experience can tell if an intra day direction change is a trend change as opposed to a retracement?

 

To explain my question further, some days the first leg is down, it retraces, and then the second leg is down, that is Leg2 is in the same direction as Leg1. On other days, the first leg is down and then it reverses trend and the remainder of the day is an uptrend.

 

I have included a 5 min chart of Friday 24 July 2009 for the ESU9 (S&P emini Sep 09) contract, as an example (all times are CT).

 

From 972 at 8:40am it fell to 962.50 at 9:56 (marked point A). From A it rose to 971 at 10:59 or +8.5 pts in 63 min (point B). A to B I am calling Leg1.

 

Next it retrace to 968.75 at 12:05 or –2.25 pts in 66 mins (point C). Then it rises to 979 @ 15:14 or +10.25 in 189 mins (point D). From C to D I am calling Leg2.

 

In this example point A marks a Trend Change with the balance of the day now upward.

 

So in reference to this graph, my question is:

“At point A is there a way to tell that the balance of the day will be up?”

In other words:

“Is there a way to tell if point A will be marking the beginning of a retracement, that the next leg after the retracement will be down, that is in the same direction as 972 to 962.50, or is it a intra day trend change?”

 

I would note that one book waits until it has risen from A and it continues to rise beyond 61.8% or 968.25 and if it does then a trend change has taken place and the rise is not a retracement. (972-962.5 = 9.5*.618 = 5.75+962.5 =>968.25 = 61.8%.) I am looking for an answer at point A so this “if it retraces more than 61.8% it is a trend change” is not the answer I am looking for.

 

Thank-you to all.

 

Try to understand the market behaviour in terms of exhaustion rather than change of trend ,,, When price exhausts @ Certain LEVEL then direction changes ... price exhaustion is the back bone of any auction market. Most quantitative Algo's including the one used in our Bank uses exhaustion theories

 

Grey1

Share this post


Link to post
Share on other sites
Try to understand the market behaviour in terms of exhaustion rather than change of trend ,,, When price exhausts @ Certain LEVEL then direction changes ... price exhaustion is the back bone of any auction market. Most quantitative Algo's including the one used in our Bank uses exhaustion theories

 

Grey1

 

Thank-you for sharing this Grey. I appreciate your insight.

 

I would certainly agree with your statement. What measures do you suggest to measure price exhaustion?

 

Is it cumulative volume within a specific time parameter of the exhaustion price? For example, in a volume spike at a key price point if the last 3 minutes of volume exceeds the average volume by a factor of x do we have a price exhaustion?

 

thanks again,

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date : 25th November 2021. Market Update – November 25 – Solid US data lifts USD, Stocks, & Yields. USD (USDIndex 96.70) holds on at 16-mth highs; Strong set of US data yesterday GDP (2.1%) up a tick but missed by a tick, Claims (199k) at 52-yr low, PCE (0.4% m/m & 4.1% y/y), in-line & largest since Jan.1991, along with a big beat (5.9%) for GDP Price index, Durable Goods (0.5%) in-line, Personal Spending (1.3%) a big beat, Personal Income (0.5%) a beat, Trade balance a big beat (14.6%) on strong Exports, Inventories (-2.2%) a big miss, but shows demand is strong. Consumer Sentiment a beat and New Home Sales flat (745K) and missed. Stocks & Yields pushed higher, Oil held onto gains and Gold tested 3-week lows.   The FOMC Minutes showed (1) there could be a faster taper than the $15bn/mth currently planned, (2) Inflation could indeed be “persistent” (3) Clear division over 2022/23 rate hike cycle, Doves hold sway for now. US Yields 10yr trades at 1.644%, down from yesterday’s 1.694% high. Equities – Gains into the Holiday USA500 +10.76 (0.23%) at 4701 – USA500.F trades higher at 4713. USOil – peaked at $78.53 Inventories +1.0 vs -1.7 weakened prices – now at $77.65 Gold found a floor at 1782, but struggles to recoup $1800 at $1790. FX markets – EURUSD now 1.1216, having broken 1.1200, USDJPY now 115.36, from 115.50 & Cable back to 1.3350 from 1.3315 yesterday. Overnight – JPY PPI (1.0%) hit a 10-yr high, German GDP and consumer confidence both missed (1.7% vs 1.8% and -1.6% vs -1.0%) respectively. European Open – December 10-yr Bund future up 16 ticks, while US futures are slightly in the red. Bunds already outperformed yesterday, as EZ spreads widened in the wake of hawkish leaning ECB comments & confirmation that German finance ministry will go to the liberal FDP, which likely means more resistance to debt mutualisation across the EZ & more pressure on ECB to limit asset purchases. DAX & FTSE 100 futures are currently up 0.4% & 0.3% respectively & US futures are posting gains of 0.3-0.4%, suggesting markets are coping quite well with the prospect of less accommodative policies. Indeed, it seems to an extent that they welcome the CB’s acknowledgement that inflation risks could be less temporary than previously thought. Today – ECB Minutes, ECB’s Elderson, Schnabel, Lagarde and BOE’s Bailey Biggest FX Mover @ (07:30 GMT) CADJPY (0.20%) The rally from Tuesday’s low under 90.00 has been sustained with 91.25 being tested earlier today. MAs aligned higher, MACD signal line & histogram rising & over 0 line, RSI 61, H1 ATR 0.077, Daily ATR 0.707. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date : 24th November 2021. Market Update – November 24 – USD & Yields Higher, Stocks Mixed, Oil Recovers. Trading Leveraged Products is risky USD (USDIndex 96.50) holds on at highs; EM currencies under particular pressure. (TRY lost 15% after Erdogan refused a rate rise). RBNZ raised rates but NZD fell (like the last time they raised rates!) JPY Inflation 2 ticks better than expected. USDJPY at January 2017 levels around 115.00. PMI data better across the globe, Stocks mixed in US & Asia, Yields bid, Oil recovered significantly and Gold pressured by yields. Biden invites Taiwan to its “Summit for Democracy”, WHO talks of additional 700k Covid deaths across Europe (Slovakia latest to talk lockdowns). US Yields 10yr trades at 1.667%, down from yesterday’s 1.684% high. Equities Mixed. Musk sold more stock, Banks & Oil majors lead. USA500 +7.76 (0.17%) at 4690 – USA500.F trades lower at 4684. USOil – rallied over 3% to $78.20 highs despite global strategic reserves being sold to cool prices. Gold found a floor at 1782, but struggles to recoup $1800 at $1790. FX markets – EURUSD down to 1.1245, USDJPY over 115.23, earlier now at 114.88 & Cable back to 1.3375. European Open – December 10-yr Bund future up 26 ticks, US futures also broadly higher. RBNZ delivered expected rate hike & markets seem to be scaling back fears of escalating inflation as even dovish leaning BoE & ECB members highlight risk of second round effects. ECB VP Guindos highlighted overnight that the drivers of inflation are becoming more structural, which adds to signals that the CB is finally ready to start reining in stimulus. DAX & FTSE 100 futures currently up 0.3% & 0.2% respectively. Today – Big data day ahead of Thanksgiving Weekend. – German Ifo, US Weekly Claims GDP, PCE, Durables, FOMC Mins. & ECB speak Biggest FX Mover @ (07:30 GMT) NZDJPY (-0.77%) RBNZ in-line but Dovish, sank from breach of 80.00 yesterday to 79.24, and 79.40 now. Faster MAs aligned lower, MACD signal line & histogram falling & below 0 line, RSI 35 & weak, Stochs OS. H1 ATR 0.17, Daily ATR 0.70. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • EURUSD HOVERS NEAR MULTI-MONTH LOW, UNDER 1.1250 LEVEL   EURUSD Price Analysis – November 24 Throughout the session, the EURUSD pair remained on the losing side and was last seen moving with considerable losses around the 1.1250-36 level. The announcement that the White House has opted to reappoint incumbent Fed Chair Jerome Powell for a second term sparked the recent strong dip. The spot is trading at 1.1253 at the time of writing, down 0.25 percent on the day. Key Levels Resistance Levels: 1.1525, 1.1422, 1.1300 Support Levels: 1.1200, 1. 1150, 1.1100 EURUSD Long term Trend: Bearish EURUSD has sunk to fresh multi-day lows, as seen on the daily chart, after extending the recent breach beneath the moving averages 5 around the 1.1300 level. This exposes the possibility of a deeper pullback and a re-test of the psychological support around 1.1200. Under the 1.1200 level, the euro’s underlying bullish attitude is in jeopardy. Overall, the EURUSD stays bearish while trading under the major horizontal support turned resistance and significant level at 1.1422. A breakout of the 1.1300 level, on the other hand, would aim for the 1.1350 level on the way to the 1.1400 zones. The fall of the 1.1200 zones, in the alternative scenario, is viewed as a bearish continuation indicator. EURUSD Short term Trend: Bearish The risk is weighted to the negative on the 4-hour chart, as the pair is developing below the firmly bearish 5 and 13 moving averages. Technical indicators have shifted to the downside, with negative levels. However, in the present scenario, the RSI has not yet reached oversold territory, allowing for more selling. On the upside, a break over the modest resistance level of 1.1300 might shift the intraday bias to neutral. On the downside, the 1.1200 zones provide initial support. The next important level of support is around the 1.1150 mark. If there are any more losses, the 1.1100 extension level of the low decline may be tested. Source: https://learn2.trade 
    • IS IT RATIONAL TO SETTLE FOR 10% RETURNS PER MONTH? “One of the secrets few know and fewer implement when it comes to trading success is that you have to really care about doing well. These days, I see a lot of traders not caring enough, not prioritizing learning about trading, and making pathetic weak-willed excuses.” – Chris T. Perfectionism – a bane of the trading world When people look for a solution to their trading problems, they tend to look for the solution in the wrong places, having the wrong mindset. One problem with most traders is perfectionism. For instance, we tend to go to those who promise us 50% to 100% per week or month. If someone gives an estimate of 5% profits per month, we would think that is too small. If an investment salesperson promises huge returns in a short period of time, we’re drawn to them. What if I tell you that 5% per month is good returns on your trading or investment, would you agree with me? Is 60% growth per annum not good enough? Many years ago, one of my mentors in the financial industry told me that, even 20% growth per annum is good. In schools, we tend to ridicule those who make average grades and praise those who make excellent grades. The same is true of the world of sports. Do you think great sports teams win all their matches always? No! But they do well over time. Are 10% gains per month too low? Now let me ask these questions: How much percentage do you earn on your savings account per annum? How much do you earn on your fixed deposit account per month? How many people can pay off their mortgages within one year? If you buy a bus, to use for commercial purposes, is it easy for you to recover your money in one year? Can you buy a property and sell it for 100% profit within 10 months? If you found a startup, how long do you think it would take you to start making profits? Please attempt to answer these questions yourself, based on real-life experiences. Now, back to the question that makes the last subheading: Are 10% gains per month too low? Why do we tend to be unrealistic and fallacious when it comes to online trading? Making 10% returns per month from Learn2.trade crypto signals One good thing about the margin trading of cryptos is that you can make money, both in bull and bear markets. You don’t make money only when the price is going up. If your timing and methodology are right, you can predict a downward movement or an upward movement and participate in them. Learn2.trade provides quality crypto signals to interested traders. Each signal comes with stop loss and take profit targets. Sometimes a trade is closed before the stop or the target is hit. We use 5 types of orders for the crypto signals. They are Instant Execution, also known as Market Execution, Buy Limit, Sell Limit, Buy Stop, and Sell Stop. Generating an average of 2 – 3 signals per day, we also use risk settings that are usually around 1% per trade and we attempt to gain more than we risk. As these signals are sent, we ensure that we also use them, practicing what we preach. Learn2.trade crypto signals – recent performances Please check the image below to peruse what has been made recently. You see can that we use stop loss, and use small lot sizes, relative to the size of the accounts. It just doesn’t make sense to bet too big on an individual trade. You can also see that we have both losses and profits. However, our average profits are bigger than average losses. That is the pedigree of a viable/ promising strategy: Make more money than you lose. Therefore, losses and drawdowns are also tightly controlled so that they don’t have significant effects on the account. These kinds of drawdowns are shallow, for recovery and eventual growth always happen. The markets are difficult but profitable Making consistent, regular profits from the market is hard, but success is possible. When the markets prove difficult, then we only need creative approaches. Markets will continue to prove uneasy and tough, but we will continue to make profits from them, no matter what. We target 10% profits per month, though we make more than this in most cases. 100% profits every 10 months is an enviable achievement. If 10% gains per month are compounded, the results in a few to several years will be amazing. Yes, you should be aware of the power of compounding. Join us today, in this journey of regular, monthly profits. Please see the image above, to know relevant metrics and figures of the recent results of the strategy behind the signals. You can join us here for, few free crypto signals per week: For Cryptos. Or you can hop in, and become our VIP right away, and enjoy all our crypto signals, up to 3 signals per day. Get access to the ability to make 10% or more per month. You can monitor our crypto signals trading performances here: L2T Crypto Signals on MyFxbook   Source: https://learn2.trade   
    • Yes trading currencies is much more risky than trading stocks, since they're not supported by central bank policy efforts but instead freely fluctuation in a very random fashion. Profits can create wrong impression that you learned how to trade but often it is just the product of pure luck. 
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.