[brownsfan019]

Nice chart Pivot!

Question - when do you know when to go with the trend and when to go against it? So far, it seems like the majority of charts posted have all been counter-trend trades.

[Anonymous]

Originally Posted by brownsfan019 »

Nice chart Pivot!

Question - when do you know when to go with the trend and when to go against it? So far, it seems like the majority of charts posted have all been counter-trend trades.

Great question BF.

I cannot say much from the WRB perspective, as I am just beginning to learn it. However, we do see the large support/resistance zone on the left. Also note that there is a White WRB just prior to the formation of the bullish white hammer pattern. These would place the trade in the sub-group reversal meaning we are looking for the up move to be MORE than a counter-trend trade.

From the VSA perspective the situation is similar but with one more key piece of information. First, we see prices falling and then we get the large volume down bar with the wide spread. This is demand entering the market. The next bar is also ultra wide with a wide spread that closes in the middle. This is stopping volume.

With the close in the middle of the range on a bar with ultra high volume, we should see this bar as a transfer of ownership from strong hands to weak hands. So if the strong hands are buying the likely direction of the trend should be up. In other words, at this point we would be looking at a Reversal and not a counter trend trade.

Now the added piece of information comes on the hammer line. In VSA terms this is a high volume 'test' bar. With that amount of volume on a test bar, we would actually be expecting prices to come back DOWN and re-test that area. Therefore, if the market moves up , we do expect a possible move back down. This could be a counter trend trade therefore, depending on how far the market moves up.

But we do see lots of strength in the background (wide spread down bar and the doji bar), so it appears to be an up-trend trade where we may need to look out for some type of move back to re-test the high volume area.

So depending on one's perspective and trading style, this IS a trend trade (reversal). The more conservative VSAer might actually wait for the re-test of the supply or a no supply signal which means NOT trading what turns out to be a counter trend trade.

The WRB(primary) and candlestick (secondary) trader could take the trade as a reversal signal-not counter trend. AND be nimble enough to take the inverted dark hammer signal that shows up at the top of the counter trend move.

[Anonymous]

Originally Posted by walterw »

Pivot : since studing volume here at TL, most probably I believe that this last post of yours are the most nice, easy and reliable pattern.... a WRB followed by a Big Doji on volume surge.... can I know whats that chart timescale ? cheers Walter.

Thanks. It's a 5 min spot Euro chart.

[brownsfan019]

Pivot - you'll have to keep us updated on this looks on the spot FX markets. I do not trade spot FX, but curious to know how you do there with these methods.

[sds]

Originally Posted by PivotProfiler »

BF, have you thought about exiting a portion on the first WRB and then another portion on the next WRB. Mark (NihabaAshi) goes to a higher timeframe after the first WRB. This allows one to get the most out of the trade.

Currently, I am not moving up a timeframe but still look to scale out in thirds. That would mean 3 profit targets.

I take a portion off as soon as the bar becomes a WRB. As I become more skillful, I know I can wait a bit get a feel for the PRICE ACTION of the bar itself.

As far as what is going on during a WRB or what we can take away from them, I will defer to the master................

Hello,

You guys are very experienced. Could you please help me in understanding the basic concepts.

Price:

Everywhere I read "Price Action". "Price Action in S/R zone". etc
What does exactly it mean? Could anyone exaplain me with example?

Supply/Demand:

When I see a S/R zone being penetrated with high volume (not ultra high), then how to judge whether it is really a demand coming or supply coming?

sds.

[walterw]

sds : this is a nice and simple article on S&R Support and Resistance - StockCharts.com price action itself is the analisis of "pivots" (higher highs, higher lows, lower highs, lower lows, etc ) on the other side we are adding volume analisis this are two nice articles : Pring Research - Technical Analysis, Educational CDs, Financial Newsletters and Charting Tools PRING.COM - The site for the savvy technician. and candlesticks patterns... here is a simple introduction Chart Analysis - StockCharts.com we are combining all together, some nice S&R levels we look at are vah, val and poc wich are Market Profile levels from previous session... there is a lot here on TL, posts and videos.... take your time and enjoy the journey of learning this powerfull concepts... hope helps cheers Walter.

[brownsfan019]

Originally Posted by sds »

Price:
Everywhere I read "Price Action". "Price Action in S/R zone". etc
What does exactly it mean? Could anyone exaplain me with example?
Supply/Demand:
When I see a S/R zone being penetrated with high volume (not ultra high), then how to judge whether it is really a demand coming or supply coming?
sds.

sds - I attempted to write a response earlier and got an IE error and off it went... that is frustrating. I'll try to retype it again here...

You will probably get a few responses, so make sure to read each one and you can see what you like.

PRICE ACTION: For me, price 'action' simply refers to the amount of trading activity or lack thereof. The more 'action' the more movements we usually see. There's action going on all day, but some are more active than others.

PRICE ACTION S/R: This would mean the amount of trading taking place at important levels. Many traders use Support/Resistance Levels, Pivot Levels, etc. to define areas of possible trade setups. Usually these are areas where good 'fights' and price action may occur. Pivot provided a great chart here: http://www.traderslaboratory.com/for...-candles-2.png You can see that he annotated the first doji on high volume and then a subsequent hammer at the same level on high volume. This would show that the bulls are clearly defending this area and that the bears are not willing to push it down further. So, that would visually tell us that this level is important to many bulls. So many that they are willing to step in to a bear charge and fend them off. This in turn created the double bottom formation that many traders use. If interested in S/R levels, I would recommend reading some books from Steve Nison as he talks about S/R levels in conjuction with candlesticks quite a bit. And Pivot provided a real example here.

Speaking more on this topic, I personally use VBC charts - http://www.traderslaboratory.com/for...ofit-1414.html - in my analysis. I prefer charts like this, some like minute charts with volume broken out as in Pivot's example.

JUDGING ACTION AROUND S/R: In Pivot's example, we see a doji and hammer at the same level with high volume. That would be reason enough for me to take the trade. How you filter the action around S/R levels is up to you. Some may add an indicator, some may add market profile, etc. etc.

[Anonymous]

Originally Posted by sds »

Price:

Everywhere I read "Price Action". "Price Action in S/R zone". etc
What does exactly it mean? Could anyone exaplain me with example?

Supply/Demand:

When I see a S/R zone being penetrated with high volume (not ultra high), then how to judge whether it is really a demand coming or supply coming?

sds.

PRICE ACTION:

For me, price action is just that-the action of price and the price bars (candles). How wide is the range of the bar? Is price up from the prior interval? Is price making higher highs or Lower Lows? Is the spread of this bar wider than the spread of the previous bar? Is the close on or near the high of the range of the bar? Are we closing higher than the open more than closing lower than the open? These are the types of things that PRICE ACTION encompasses.

A much more esoteric understanding of price action involves CANDLE FORMATION. Not candle formations, but the formation of an individual candle line. Does the candle end the period with price on the high, but actual only traded to the high in the last 10 seconds of the 3 minute bar. Did price trade down to the low of the bar and remain there the entire interval? If price immediately trades down to the low (not known till close of period) and stays there, the was more selling pressure than buying pressure (leaving volume aside for the moment). Does price move up and down through out the bar's range and then close in the middle and equal to the open? Well the action shows indecision. Note that this is a Doji, but no knowledge of candlesticks could tell you that the bar is a bar of indecision.

These are the elements of PRICE ACTION for me.

SUPPLY/DEMAND:

1. First my perspective is from VSA
2. Read selling (supply) and buying (demand).

Before you do 2, however, it is best to understand supply and demand via the stock market. Supply means the actual stock being placed into the market. Like anything, too much tends to lead to falling prices. Demand means stock being taken out of the market. If there are many people chasing few goods price will tend to rise. That is just basic Econ 101.

Now in futures and currencies we can substitute supply with selling and demand with buying. Contracts are created by both a buyer and a seller so there is always a contract created. In stocks the amount of stock is "finite".

VSA teaches that strength comes in on down bars and weakness comes in on up bars. Strength is buying (demand) and weakness is selling (supply).

One needs to look at where the close is in relation to the size of the spread, the volume on the bar, the close in relation to the prior bar and the close of the next bar. All of these need to be looked at to determine if the high volume is associated with supply or demand.

Check out Tradeguider.com if you want to learn more about VSA and the CBOT has a few webinars. Continue to read this thread and others for more understanding.