[cowseathay]

Hi,

I am a novice to Wyckoff and am trying to learn and apply his principles.

Often I have trouble telling a retracement from a reversal and I want to post a chart of the Euro from today to illustrate my problem.

I'm posting the one minute chart and also the five minute chart for context. Around 12:20 price started breaking out of resistance with great volume and pace. Around 12:23 the price and volume action was indicating (to me) a potential buying climax (the volume peaked). Another clue was that price stopped at a well established resistance from earlier in the day and from last week. Then it began retracing and after a few bars the first up bar came about with what seemed to me like good buying pressure (for one, the volume was higher than the prior down bars). However price turned around and started going lower and you can see what happened. But it never went back up to test the high that was just made, and instead just kept going slowly lower. There was even a large volume bar around 13:00 in which the price went higher which I thought could be the buying pressure coming back in but then price kind of died out and started grinding lower and lower.

I'm just wondering, were there any clues that that there was not going to be a complete retracement and that price is instead reversing? Or am I just thinking too deeply into it and should just accept that the trade didn't work?

Any help is greatly appreciated.

Thank you,
CowsEatHay

[cowseathay]

Just for further context, I'm also posting another chart of the euro of a much larger timeframe for a bigger picture view.

Thanks,
CowsEatHay

[Bearbull]

Originally Posted by cowseathay »

Just for further context, I'm also posting another chart of the euro of a much larger timeframe for a bigger picture view.

Thanks,
CowsEatHay

You have already drawn trendlines on the 1min chart, if you were long, your exit would be either the break of TL or break of previous swing low, refer to Dbphoenix forum and blog for further info. on how to apply Wyckoff principles in this regard.

[cowseathay]

Originally Posted by Bearbull »

You have already drawn trendlines on the 1min chart, if you were long, your exit would be either the break of TL or break of previous swing low, refer to Dbphoenix forum and blog for further info. on how to apply Wyckoff principles in this regard.

Thanks for your reply Bearbull. I understand that had a long been taken, I could exit at the break of the TL. However, I was wondering if there were any clues in the price-volume relationship that would preclude taking the long in the first place?

[Bearbull]

Originally Posted by cowseathay »

Thanks for your reply Bearbull. I understand that had a long been taken, I could exit at the break of the TL. However, I was wondering if there were any clues in the price-volume relationship that would preclude taking the long in the first place?

You had all the signs of reversal to the upside around 10-11 above a support area of 156.72, infact a higher low, ( climatic sell off followed by sharp reversal and then a test on low vol), had this test been on high vol i.e down bars with increasing vol, then that would negate the reversal signal and it would expect the support to fail, in which case you would continue to monitor and look for further signs of reversal via price-vol relationship. I would strongly urge you to study Dbphoenix threads in Wyckoff forum and his blog, there is a ton of invaluable info. there, well worth the slog

[DbPhoenix]

Originally Posted by cowseathay »

Hi,

I am a novice to Wyckoff and am trying to learn and apply his principles.

Often I have trouble telling a retracement from a reversal and I want to post a chart of the Euro from today to illustrate my problem.

I'm posting the one minute chart and also the five minute chart for context. Around 12:20 price started breaking out of resistance with great volume and pace. Around 12:23 the price and volume action was indicating (to me) a potential buying climax (the volume peaked). Another clue was that price stopped at a well established resistance from earlier in the day and from last week. Then it began retracing and after a few bars the first up bar came about with what seemed to me like good buying pressure (for one, the volume was higher than the prior down bars). However price turned around and started going lower and you can see what happened. But it never went back up to test the high that was just made, and instead just kept going slowly lower. There was even a large volume bar around 13:00 in which the price went higher which I thought could be the buying pressure coming back in but then price kind of died out and started grinding lower and lower.

I'm just wondering, were there any clues that that there was not going to be a complete retracement and that price is instead reversing? Or am I just thinking too deeply into it and should just accept that the trade didn't work?

Any help is greatly appreciated.

Thank you,
CowsEatHay

You got your reversal when price failed to break through R. You then got your retracement at 1300. It didn't retest R, but it was a retracement nonetheless. That volume is "higher" doesn't necessarily mean buying pressure. Look at those upper tails. That's not buying pressure. That's failure.

As for going long, you failed to break through R, so why go long? If you're going to go long, wait for the breakout, if any. If you instead want to buy a retracement back to R now S after the BO, that's up to you. But any retracement after a failure to break through R will just as likely end up being a lower high, and a reason to go short, as in this case.

You have to think about the purpose behind a retracement, which is to give people who missed the real trading opportunity a second chance to enter. Here, there was no missed buying opportunity since price never broke through R. The missed opportunity is instead the short entry at the reversal, and the retracement afterward represents a second opportunity to enter the short.

[cowseathay]

Originally Posted by Bearbull »

You had all the signs of reversal to the upside around 10-11 above a support area of 156.72, infact a higher low, ( climatic sell off followed by sharp reversal and then a test on low vol), had this test been on high vol i.e down bars with increasing vol, then that would negate the reversal signal and it would expect the support to fail, in which case you would continue to monitor and look for further signs of reversal via price-vol relationship. I would strongly urge you to study Dbphoenix threads in Wyckoff forum and his blog, there is a ton of invaluable info. there, well worth the slog

Thanks for your reply and explanation Bearbull. I see what you're saying but I was actually referring to the reversal to the downside that happened after 12:23. Sorry if I wasn't clearer. And also, I have been and continue to study Db's threads and his blog and am trying to assimilate his insightful presentation of Wyckoff's methods but I know I have a long way to go. It's easier studying it in hindsight than applying it in real time but I know it just takes a lot of practice as with any other endeavor.

CowsEatHay

[cowseathay]

Originally Posted by DbPhoenix »

You got your reversal when price failed to break through R. You then got your retracement at 1300. It didn't retest R, but it was a retracement nonetheless. That volume is "higher" doesn't necessarily mean buying pressure. Look at those upper tails. That's not buying pressure. That's failure.

As for going long, you failed to break through R, so why go long? If you're going to go long, wait for the breakout, if any. If you instead want to buy a retracement back to R now S after the BO, that's up to you. But any retracement after a failure to break through R will just as likely end up being a lower high, and a reason to go short, as in this case.

You have to think about the purpose behind a retracement, which is to give people who missed the real trading opportunity a second chance to enter. Here, there was no missed buying opportunity since price never broke through R. The missed opportunity is instead the short entry at the reversal, and the retracement afterward represents a second opportunity to enter the short.

Wow, thanks for that explanation db. I didn't really think about the purpose behind the retracement like you mention, but what an insightful way to look at the market. Your explanation makes perfect sense. I just need to keep practicing and learning to perceive the markets in this way.

CowsEatHay