[matinthehat]

Here is a chart of a downward movement of the YM. I have put my interpretation of it below. Please point out my errors. Thanks.


1. End-to-end down bar with very high activity = selling climax

2. Then a rise on lighter and dying volume = indicating lack of selling pressure

3. The high of the movement is on very low volume and is not able to reach the previous movement’s high nor the opening high

4. Then a decline on higher volume

5. The movement makes new lows on low volume and pushes passed the previous movement’s low = indicating that selling pressure has been exhausted

6. The lowest bar is followed by a indecision bar on lower volume than the low - this bar closes above the low - indicating that there are sellers and buyers, but not enough of either to push or pull

7. Then there is a rise with low volume - buying power is greater than the selling power as near the end of the move there is substantially higher volume with little price movement = indicating buyers and sellers seeking equilibrium

8. The next big up bar is on higher volume that saw selling pressure, but the buying pressure was greater

9. The top is on light volume and the buyers are not able to make new highs = indicating lack of demand

10. Then a decline follows on light volume - indicating buying pressure has been exhausted

11. The decline is broken by a rise with rising volume ending with extremely high volume and little price advance - the price does not really get close to resistance = indicating buying exhaustion

12. The price then declines on light volume = exhaustion of buying pressure - this move has a hammer with higher volume, but the hammer is a bearish one and the sellers overpowered the buyers

13. Price then approaches support on light volume and is not able to break through = indicating lack of selling pressure

14. Price then rises on light volume with one bar on high volume and then just stalls at the top on light volume = indicating equilibrium has been met - this move fails to make it to resistance, possibly meaning that there is now new resistance

15. The downward movement is then met by increasing volume and price breaks through support and then halts on its way down on low/dying volume and continues from there

[DbPhoenix]

Originally Posted by matinthehat »

Here is a chart of a downward movement of the YM. I have put my interpretation of it below. Please point out my errors. Thanks.

You clearly put in a great deal of work on this, and I acknowledge the effort. But before we get into "errors", do me a favor. Create the same chart using a line for price rather than bars. Also, if you can, plot a 1-period MA of volume in the volume window. Then post the chart here.

[learner]

Hi Db,

Here is the chart with line and vol + 2 MA (I cannot able to plot 1 MA). What are things I want to see in the below chart.

[matinthehat]

Here it is:



I probably should stick with line charts until i completely understand IT. When i have bar charts up it makes "reading the volume and price action" seem kind of intimidating. But when i have this simple style up it doesn't look so scary.

[DbPhoenix]

Originally Posted by matinthehat »

Here it is:



I probably should stick with line charts until i completely understand IT. When i have bar charts up it makes "reading the volume and price action" seem kind of intimidating. But when i have this simple style up it doesn't look so scary.

I darkened your volume line a bit to make it easier to see. Before we go back to your bar chart, tell me what you see here:

[matinthehat]

Hopefully this is good:



1. New low with high volume = selling climax
2. Rise with light volume = selling pressure exhausted
3. Top with low volume = not enough demand
4. Lighter volume on decline = buying pressure seems to be exhausted
5. New low for the day with lighter volume = lack of supply
6. Rise with low/stable volume = selling pressure exhausted
7. Top with light volume = lack of demand
8. Decline with light volume = buying pressure exhausted
9. Spike on high volume = buyers came in but selling is still very overpowering
10. Decline on light volume = buying pressure is exhausted
11. Rise on light volume = not much participation on the rise
12. Top is formed with light volume
13. Decline on rising volume = excessive supply in the market

[DbPhoenix]

Originally Posted by matinthehat »

Hopefully this is good:



1. New low with high volume = selling climax
2. Rise with light volume = selling pressure exhausted
3. Top with low volume = not enough demand
4. Lighter volume on decline = buying pressure seems to be exhausted
5. New low for the day with lighter volume = lack of supply
6. Rise with low/stable volume = selling pressure exhausted
7. Top with light volume = lack of demand
8. Decline with light volume = buying pressure exhausted
9. Spike on high volume = buyers came in but selling is still very overpowering
10. Decline on light volume = buying pressure is exhausted
11. Rise on light volume = not much participation on the rise
12. Top is formed with light volume
13. Decline on rising volume = excessive supply in the market

It's very good. And I hope that the transition hasn't caused any motion sickness. But viewing price and volume in terms of movement rather than bars takes some adjusting, and patience is in order.

I suggest you begin by trying to avoid yes/no, on/off, stop/go words like "climax", "exhausted", "lack". A climax, for example, is quite an event, and doesn't come along very often. Save it. As for exhaustion and lack, if that were the case, trading would come to a halt. Though these words may be bandied about by people who ought to know better (including me), they encourage a certain type of perception that will not serve the Wyckoff trader well. Better to think of balancing and a never-ending pushmepullyou.

1. Falling price and rising volume. Both buyers and sellers are heavily into the market, but sellers have the upper hand. Buyers, though, are showing their support (rising volume).

2. Selling pressure is being withdrawn. This can be seen by (a) volume declining and (b) price rising. If the battle between buyers and sellers were continuing at a high level and buyers had the upper hand, price would still rise, but volume would be higher.

3. Correct. Not enough demand. Not even enough to overcome what minimal selling pressure there is, much less make a higher high.

4. Sellers see that buyers don't have it and they begin to push harder. Volume starts out light and price declines, but buyers begin to re-exert themselves and volume increases. Sellers, however, have greater strength, and price continues to decline to a lower low.

5. Sellers again withdraw, though volume is much lighter than it was during the last swing low. Since volume is less, and price is lower, sellers aren't having to work as hard to move price down.

6. Price rises on lower volume. Buyers have the upper hand again, and sellers are backing off. They may be laying a trap, or they may truly be "exhausted" (the latter is possible, but not likely, given price's progress). But neither really matters. Price is rising. Who cares why? It is important to note, however, that volume peaks before price does, so buyers had a little momentum going here, enough to at least test that last swing high.

7. But, when push came to shove, they ran out of gas, and the balance shifted back to the side of sellng pressure.

Get the idea? Want to try the rest? And don't abandon your S/R lines. They are just as pertinent to a line chart as they are to a bar chart.

[matinthehat]

Ya, i really do need to stop using those words. In hindsight i look a f*ing idiot. Thanks for the new vocabulary and perspective. I'll give the end bit a try.