Making of a method
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They're not the same, but I'm sure they're confused. One can anticipate the direction of price one way or another without invoking a bias. Though bias can be defined in more than one way, it generally involves a focus on what price may do or is going to do, whereas the emphasis in trading price ought to be on what price is doing at the moment and from moment to moment thereafter.
This morning, for example, price sat in the middle of yesterday's trading range from 30-40. Even though the trend and therefore the line of least resistance is up, price ranged all day yesterday. The fact that it came to rest in the middle of that range suggested that the line of least resistance, for the time being, was sideways. One could trade a bounce off support or resistance, but otherwise there wasn't much to do other than wait for one or the other, or for a breakout through one or the other. Introducing other factors might aid one in formulating a bias, but that wouldn't move price.
The process of arriving at a bias has helped me focus more on context and less on the pattern of the moment.
For example: The internal shift from a neutral to long bias would be arrived at by considering all the elements of context (including present price action) and combining them into one single opinion - long/short/neutral (although the opinion itself may have shades of degree).
Elements of context will not have a fixed weighting. At times, the quality of most recent Price action at a S level may weigh the heaviest, while at other times the extent of a wave may be the dominant factor.
At the end of the day, I would like to build confidence in being able to see that up is up and down is down, and anticipate it to be such more often than not.
June 10
Price has climbed back up to the top of the channel on the daily. Big trend day on the 7th retraced a bit but then consolidated during ON. Price dipped a bit and S came in during PM to push price to just above the highs of the 7th. Price up 85 points from the lows of the 6th. This fast climb plus the action from PM shows the trend to be up. But it may be overextended and the fact that price is at the top of the channel tempers any long bias for now.
S: 2991
S: 2985
S:2975
R: 3007
R: 3020
0831 Price has fallen very fast. Now below first S level. This sharp selling will probably retrace.
0833 S zone of 91 does not come in to reverse the climactic selling. Bias mildly short because there is S zone of 85 below that led to the PM buying wave.
0835 88 zone has been repeatedly tested. S established. Traders will likely explore the upside now. Bias long.
0837 Upside attempt encountering a lot of R from the PM action. Long bias weakening, but still in place.
0839 More confirmation of R. Exit and stay neutral until price moves past OL and OH.
0845 Falls and breaches S zone
0846 The ret is strong back into S zone. Neutral.
0850 The repeated test of S below and the most recent buying wave is shifting bias to long. Look for opps to get in anticipation of breakout past R from OH.
0852 At OH
0853 Strong bounce off R back into the middle of the range.
0900 Sharp fall to Range S. Lookout for a break that does not retrace back too much into range.
0907 The bounce off S goes till the mp of the range and then falls back sharp down to S zone. While still in range, there is more weakness than strength being exhibited.
0912 Breach of Range S. Bias short. Looking for ret for entry.
0916 Range holds as breach retraces deep back inside.
0930 Buying pressure building up to break past Range R. Will stay neutral until there is a clear break because of how well this Range has acted today.
0935 Breach
0936 Clear break past range. Bias long.
0941 No strong follow through. Pace is slow and sideways movement. Weakening long bias. Can scale out some here. The S from Range below is still there though.
0954 R at 3002 shown thrice. Exit all and neutral.
Summary:
1: Bias short
2: Confirmation of S through retest and good quality rev. Bias long.
3: Not much follow through and a lot of R from PM. Weakening short.
4: Confirmed R. Neutral.
5: Long in anticipation of break
6: Confirmed range. Neutral.
7: Buying wave stops at mp of range. Bias turning short.
8: Short bias being confirmed. Lookout for ret opps.
9: Sings of break but still neutral because of slowing pace and the past behavior of this range.
10: Long confirmed
11: Weakness some exit
12: Exit all and turn neutral.
http://www.sierrachart.com/image.php?l=1375815384722.png
Price has climbed back up to the top of the channel on the daily. Big trend day on the 7th retraced a bit but then consolidated during ON. Price dipped a bit and S came in during PM to push price to just above the highs of the 7th. Price up 85 points from the lows of the 6th. This fast climb plus the action from PM shows the trend to be up. But it may be overextended and the fact that price is at the top of the channel tempers any long bias for now.
S: 2991
S: 2985
S:2975
R: 3007
R: 3020
0831 Price has fallen very fast. Now below first S level. This sharp selling will probably retrace.
0833 S zone of 91 does not come in to reverse the climactic selling. Bias mildly short because there is S zone of 85 below that led to the PM buying wave.
0835 88 zone has been repeatedly tested. S established. Traders will likely explore the upside now. Bias long.
0837 Upside attempt encountering a lot of R from the PM action. Long bias weakening, but still in place.
0839 More confirmation of R. Exit and stay neutral until price moves past OL and OH.
0845 Falls and breaches S zone
0846 The ret is strong back into S zone. Neutral.
0850 The repeated test of S below and the most recent buying wave is shifting bias to long. Look for opps to get in anticipation of breakout past R from OH.
0852 At OH
0853 Strong bounce off R back into the middle of the range.
0900 Sharp fall to Range S. Lookout for a break that does not retrace back too much into range.
0907 The bounce off S goes till the mp of the range and then falls back sharp down to S zone. While still in range, there is more weakness than strength being exhibited.
0912 Breach of Range S. Bias short. Looking for ret for entry.
0916 Range holds as breach retraces deep back inside.
0930 Buying pressure building up to break past Range R. Will stay neutral until there is a clear break because of how well this Range has acted today.
0935 Breach
0936 Clear break past range. Bias long.
0941 No strong follow through. Pace is slow and sideways movement. Weakening long bias. Can scale out some here. The S from Range below is still there though.
0954 R at 3002 shown thrice. Exit all and neutral.
Summary:
1: Bias short
2: Confirmation of S through retest and good quality rev. Bias long.
3: Not much follow through and a lot of R from PM. Weakening short.
4: Confirmed R. Neutral.
5: Long in anticipation of break
6: Confirmed range. Neutral.
7: Buying wave stops at mp of range. Bias turning short.
8: Short bias being confirmed. Lookout for ret opps.
9: Sings of break but still neutral because of slowing pace and the past behavior of this range.
10: Long confirmed
11: Weakness some exit
12: Exit all and turn neutral.
http://www.sierrachart.com/image.php?l=1375815384722.png
June 11
Price plunged ON and is now back in the middle of the Daily channel. Price also at mp zone of the buying from the lows of the 6th. Neutral bias.
R: 2962
R: 2980 (mp of down move from the highs of the 10th)
S: 2958 (mp zone of up wave from lows of the 6th)
S: 2952
S: 2942
0831 First down wave from the open finds S at 53. Neutral.
0832 More retests of S zone and now a bigger Rev off S. Long bias and lookout for entry opp on ret.
0834 56 providing repeated R. Price in a 3 point range and it is bound to break free. Bias turns long to neutral because the trend is down.
0835 Price falls back to S zone. Still neutral unless there is a breach below S.
0836 Fall through S zone of 53 to 49 but there is a strong ret. Bias turning short but there is strong S at 49.
0837 Rev move back above 53 zone. Strong S confirmed. Bias neutral again until price nears R zone of 56.
0840 Price at 56, which is now top of range. Long would be taken at break of range and ret
0842 Busts through R and finds more R at OH. Bias long. Current ret giving opp to get in for breaking past OH.
0846 Deep ret was brought back by buyers and price again moves to test R zone of 56
0850 Anticipated R at 64 manifests strong. Exit some here. Still long.
0853 R tested repeatedly and still holding. Price getting compressed. Likely to break in either direction now. Exit all.
0857 Price breaks down from the compression but no short bias yet.
0859 Reverses and breakout of R. Retraces just a bit. Bias turning long if ret of the BO is not too deep.
0908 LH created earlier. Neutral.
0911 Cuts right through previous large number of trades at 63 zone. Too late to be short.
0922 Rises off S established at 57. Bias long, though pace is expected to slow down now.
0933 ret + LH. Exit some. Still long.
0936 pace slow and R being confirmed. Exit some. Still long.
0953 Exit all and neutral
Summary:
1: Early Rev could be taken as S is established and traders likely to explore upside.
2: R at 57 stops price. Exit because the first few mins after the open demand a quick move. If price is not moving at this time, get out.
3: Short bias as traders seem to decide on direction but strong REV and quickly neutral again as price goes back into congestion zone.
4: Breaks the 3 pt range that had formed on the 5s. The strong REV earlier confirmed S zone at 50/53. Bias long.
5: Pace has slowed and thrust above R zone is quickly brought down. Scale out.
6: Scale out all as R zone seems to be holding. Neutral.
7: Uptrend has resumed. Opp to get in on BO from R and then a ret for entry.
8: LH and previous short buying wave shifts me to neutral. Exit all.
9: Did not expect price to fall so quickly through the previous trades but now too late to enter, especially since good S had been established earlier.
10: Break from S zone congestion. Existence of good S zones underneath and the fact that price has trended up leads to long bias.
11: Exit some on loss of momentum. Still long.
12: Gave it time to work but still flat. Exit all.
http://www.sierrachart.com/image.php?l=1375840116333.png
Price plunged ON and is now back in the middle of the Daily channel. Price also at mp zone of the buying from the lows of the 6th. Neutral bias.
R: 2962
R: 2980 (mp of down move from the highs of the 10th)
S: 2958 (mp zone of up wave from lows of the 6th)
S: 2952
S: 2942
0831 First down wave from the open finds S at 53. Neutral.
0832 More retests of S zone and now a bigger Rev off S. Long bias and lookout for entry opp on ret.
0834 56 providing repeated R. Price in a 3 point range and it is bound to break free. Bias turns long to neutral because the trend is down.
0835 Price falls back to S zone. Still neutral unless there is a breach below S.
0836 Fall through S zone of 53 to 49 but there is a strong ret. Bias turning short but there is strong S at 49.
0837 Rev move back above 53 zone. Strong S confirmed. Bias neutral again until price nears R zone of 56.
0840 Price at 56, which is now top of range. Long would be taken at break of range and ret
0842 Busts through R and finds more R at OH. Bias long. Current ret giving opp to get in for breaking past OH.
0846 Deep ret was brought back by buyers and price again moves to test R zone of 56
0850 Anticipated R at 64 manifests strong. Exit some here. Still long.
0853 R tested repeatedly and still holding. Price getting compressed. Likely to break in either direction now. Exit all.
0857 Price breaks down from the compression but no short bias yet.
0859 Reverses and breakout of R. Retraces just a bit. Bias turning long if ret of the BO is not too deep.
0908 LH created earlier. Neutral.
0911 Cuts right through previous large number of trades at 63 zone. Too late to be short.
0922 Rises off S established at 57. Bias long, though pace is expected to slow down now.
0933 ret + LH. Exit some. Still long.
0936 pace slow and R being confirmed. Exit some. Still long.
0953 Exit all and neutral
Summary:
1: Early Rev could be taken as S is established and traders likely to explore upside.
2: R at 57 stops price. Exit because the first few mins after the open demand a quick move. If price is not moving at this time, get out.
3: Short bias as traders seem to decide on direction but strong REV and quickly neutral again as price goes back into congestion zone.
4: Breaks the 3 pt range that had formed on the 5s. The strong REV earlier confirmed S zone at 50/53. Bias long.
5: Pace has slowed and thrust above R zone is quickly brought down. Scale out.
6: Scale out all as R zone seems to be holding. Neutral.
7: Uptrend has resumed. Opp to get in on BO from R and then a ret for entry.
8: LH and previous short buying wave shifts me to neutral. Exit all.
9: Did not expect price to fall so quickly through the previous trades but now too late to enter, especially since good S had been established earlier.
10: Break from S zone congestion. Existence of good S zones underneath and the fact that price has trended up leads to long bias.
11: Exit some on loss of momentum. Still long.
12: Gave it time to work but still flat. Exit all.
http://www.sierrachart.com/image.php?l=1375840116333.png
Some thoughts and questions upon reading Section 7M.
1) Determining the trend of the market means more than just seeing that prices have been rising - so trend is up, or that prices have been falling - so trend is down. Determining the trend means gauging the current most likely 'potential' of the market, i.e the Line of Least Resistance. This is why S/R is important. A visibly up-trending market could have a LOLR that is down based on the quality of S/R and the potential to mean revert.
2) If bias long - then buy downwave off S.
If bias short - then sell upwave off R
3) His analysis made extensive use of volume. Since volume is merely the intensity of buying and selling, why is it less important when being used to study PA in futures? Even if there is no float, isn't the increase or decrease of contracts being struck up between traders saying something?
1) Determining the trend of the market means more than just seeing that prices have been rising - so trend is up, or that prices have been falling - so trend is down. Determining the trend means gauging the current most likely 'potential' of the market, i.e the Line of Least Resistance. This is why S/R is important. A visibly up-trending market could have a LOLR that is down based on the quality of S/R and the potential to mean revert.
2) If bias long - then buy downwave off S.
If bias short - then sell upwave off R
3) His analysis made extensive use of volume. Since volume is merely the intensity of buying and selling, why is it less important when being used to study PA in futures? Even if there is no float, isn't the increase or decrease of contracts being struck up between traders saying something?
It's not less important, but I gave up on discussing it some time ago. So much misinformation about it has been circulated over the past dozen years and vendors have made such a concerted effort to make it into a indicator that it's been much easier, particularly with regard to following price, to ignore it.
If you're interested, there's an entire thread on it at TL (http://www.traderslaboratory.com/forums/wyckoff-forum/5266-volume-archive.html) and it's relatively short.
June 13
Price had a massive 81 point fall yesterday. Has climbed back a bit from the lows with the accompanying retest of S. Price picked up some more during PM with a steep rise that is current retracing.
Overall, oversold condition with the extent of yesterday's drop. Anticipating a rally to retrace price back to the mp zone level of 39.
R: 2926
R: 2939 (mp zone of yesterday's downwave)
S: 2921 (mp of recent PM upwave)
S: 2915 (mp of congestion from pm)
1: Opening exploration hits R and reverses fast
2: The ret here offers a chance to go short during an upwave. Short will only be placed if I believe the LOLR to be down. Since price met expected R after the open the LOLR is down because during the first few mins after the open there is a tendency to explore both sides. Since the downside had not been explored, bias is short.
3,4,5: The sharp drop finds S at anticipated level of 15. The rally is very small and price drops again to make a LL. This indicates weakness. But the LL is brought back a ways and S is confirmed. Since the bias for the session is long, owing to the oversold condition caused by yesterday's drop, this could be a low risk place to position a long. The risk is small because the S level formed by the retest on the reaction is close by. This was the most important zone of the day. Key would have been remaining aware of the previous day's oversold condition, the fact that price was at an anticipated S level, and the behavior of price at this level (retested).
6: Reaction at expected R zone. But no compelling reason to get out.
7: Price just made a DT and fell quickly. Weakness. And price quickly falls before anything can be done to position for a short.
8: The reaction to the mp zone is quickly recovered. This quick recovery back from the mp zone is a sign that traders want to test the R again. It may form another retest. But I don't know that. I do know that the overarching bias is long and that it has been confirmed by price reversing from the mp zone level. Long could be entered on the small hesitation in anticipation of price breaking through R. The S from the prior congestion zone below R provides a natural zone to determine a exit with small loss if trade does not work.
9: The action since breaking the R has not been very impressive. The downwave is impressive and by now everything would have been exited. If bias becomes short, the hesitation provides an opp to take a short trade and see how price reacts at the upcoming S zone of 20
10 S came in at a slightly higher level that the previous time. Strength. Plus a retest. The rally off this retest retraces at the now reliable R zone of 27. This ret is brought back strong. The hesitation immediately after this bring back offers an opp to go long in anticipation of breaking the old R zone.
Potential guidelines for all trades:
1) Longs have to be taken on downwaves and Shorts on upwaves to minimize price risk
2) In order to avoid making the above into countertrend trading, trades have to be placed in the direction of LOLR.
3) The determination of LOLR will be based on a number of factors, but at the very least, there has to be a clearly identifiable S/R level that forms the basis for the LOLR.
http://www.sierrachart.com/image.php?l=1376029262302.png
Price had a massive 81 point fall yesterday. Has climbed back a bit from the lows with the accompanying retest of S. Price picked up some more during PM with a steep rise that is current retracing.
Overall, oversold condition with the extent of yesterday's drop. Anticipating a rally to retrace price back to the mp zone level of 39.
R: 2926
R: 2939 (mp zone of yesterday's downwave)
S: 2921 (mp of recent PM upwave)
S: 2915 (mp of congestion from pm)
1: Opening exploration hits R and reverses fast
2: The ret here offers a chance to go short during an upwave. Short will only be placed if I believe the LOLR to be down. Since price met expected R after the open the LOLR is down because during the first few mins after the open there is a tendency to explore both sides. Since the downside had not been explored, bias is short.
3,4,5: The sharp drop finds S at anticipated level of 15. The rally is very small and price drops again to make a LL. This indicates weakness. But the LL is brought back a ways and S is confirmed. Since the bias for the session is long, owing to the oversold condition caused by yesterday's drop, this could be a low risk place to position a long. The risk is small because the S level formed by the retest on the reaction is close by. This was the most important zone of the day. Key would have been remaining aware of the previous day's oversold condition, the fact that price was at an anticipated S level, and the behavior of price at this level (retested).
6: Reaction at expected R zone. But no compelling reason to get out.
7: Price just made a DT and fell quickly. Weakness. And price quickly falls before anything can be done to position for a short.
8: The reaction to the mp zone is quickly recovered. This quick recovery back from the mp zone is a sign that traders want to test the R again. It may form another retest. But I don't know that. I do know that the overarching bias is long and that it has been confirmed by price reversing from the mp zone level. Long could be entered on the small hesitation in anticipation of price breaking through R. The S from the prior congestion zone below R provides a natural zone to determine a exit with small loss if trade does not work.
9: The action since breaking the R has not been very impressive. The downwave is impressive and by now everything would have been exited. If bias becomes short, the hesitation provides an opp to take a short trade and see how price reacts at the upcoming S zone of 20
10 S came in at a slightly higher level that the previous time. Strength. Plus a retest. The rally off this retest retraces at the now reliable R zone of 27. This ret is brought back strong. The hesitation immediately after this bring back offers an opp to go long in anticipation of breaking the old R zone.
Potential guidelines for all trades:
1) Longs have to be taken on downwaves and Shorts on upwaves to minimize price risk
2) In order to avoid making the above into countertrend trading, trades have to be placed in the direction of LOLR.
3) The determination of LOLR will be based on a number of factors, but at the very least, there has to be a clearly identifiable S/R level that forms the basis for the LOLR.
http://www.sierrachart.com/image.php?l=1376029262302.png
June 14
Price moved up yesterday with strength all the way to the top of the channel on the daily. Condition is now slightly overbought. ON has been largely sideways with no serious attempt to resume the advance. Range has narrowed during PM.
R: 2966 (multiple R through ON)
R: 2970 (yesterday's high)
R: 2979 (R from ON and PM of the 12th)
S: 2956 (from PM)
S: 2934 (mp zone of yesterdays climb)
0832/10 - Opening led to a fall to PM S zone and there was a quick rally recovering most the fall. Price then went through a normal reaction and found S above the mp level. An attempt upwards created a LH.
0832/55 - Small range and compression between 61 and 59.
0833/30 Price leaves range top and then retraces a bit. Opp to enter on the ret in anticipation of traders exploring the upside. The tight range below should provide S.
0834/05 BO is fizzling and chance to go back to middle of former range.
0834/40 Volume is very high with good amount of price range. Selling pressure meeting prior S point of 59. Price is currently in the middle of OH and OL with no clear direction.
0835/25 S zone of 59 halts the downwave. DB is created and the rally off the DB is strong so far. Opp to go long at low price risk if I believe that the LOLR is up. But why should I believe that? Price has tried to knock against R more than it has against S.
0837 Price making HH and HL's since the DB and climbing to test R again. The ret now offers another opp to go long in anticipation of breaking through R.
0838/40 Falls back towards S on very low volume indicating very little buying pressure.
0839/10 Breaches past S zone and LOLR is now down. Ret will offer opp to go short in anticipation of breaking through OL.
0842/40 Unusual for price to drift in such a narrow range at this time of the day. Currently just below the apex but may be just drifting.
0843/20 Climbs to the LH from the base of narrow range and reacts there. This may be the eventual break from all this congestion. Ret here offers long opp. Apex of the hinge would offer logical S zone for risk management.
0843/55 Rally meets R at thrice tested OH zone. Reacts a bit but there is a very strong volume surge leading to a small increase in price. This shows that there is large selling and buying pressure here. So an eventual break of R could go a ways. The SL at 60.75 provides a natural zone to determine if the LOLR is still up.
0845/30 Price bounces off the SL. LOLR is still up and the trade to break through R should still be on.
0850/10 The break encounters R shortly after breaking free of OH but none of the reactions are deep. It keep climbing and is now at the anticipated R zone of 66, which has shown to be strong previously.
0850/30 A big drop on high volume, confirming the R zone and indicating weakness and an opp to exit trade and stay neutral.
0852 Back down to OH zone which should now offer S.
0852/45 Flat movement at the mp zone of the upwave from 58 to 66. Neutral.
0853/45 The prior R not providing any substantial buying pressure and price dipping on the other side of mp. LOLR shifting down, unless there is a strong rally off the mp.
0855/35 Drops fast to bottom of the big congestion since the open. Speed of the drop indicating a likely rally. While the downwave from the highs to this point is quited extended, a ret will give an opp to go short in anticipation of a break of S and exploration of the downside, which would fit in with the larger overbought condition from yesterday.
0857/20 Very strong rebound from S and back into neutral. If I was trading ranges, the HL retest off S would have been a good opp to go long.
0900/20 The strong climb to R loses some pace but none of the reactions are deep. Don't want to go long here because the range has shown to hold and a long here would be after an extended run from range bottom. Short would be a better trade. But the strength of the climb and lack of any strong reactions does not make a strong case for short either.
0901/5 Reaction moves deeper and more confirmation of R to be holding. A rise back to R would now offer a good opp to go short.
0902 Short this rally at 64.75
0902/30 Price makes new high and the short would be exited.
Summary:
1: Price in the middle of opening high and low. Neutral.
2: Long opp on ret anticipating breaking OH.
3: S zone at 59 stops price and a DB created on the 5s giving an opp to enter long. But there was no compelling reason for a long bias here, as both up and down S/R zones had been effective.
4: If a long was taken, it would have been exited as hinge is being confirmed
5: Breach past S zone turning LOLR down but nothing significant happened to take a short position.
6: Break up the upside from the apex. Bias long with entry on downwave.
7: Ant R zone of 66 shows itself. Has been strong in the past and leads to scale outs.
8: Prior R not providing any S to the descending wave. LOLR shifting down.
9: Was thinking short here in anticipation of break but that would not have worked. Thinking short after an extended run right above S was a mistake. Better thinking would be to count on S and then observe the HL on the 5s as confirmation to go long. Even if the LOLR turns out to be down, there is likely to be a meaningful rally after such a fall and thus I would have the space to exit the trade in time even if it did not work.
10: Used previous logic to not think long here because of the extension and the presence of confirmed R zone of 66 above.
11: Used boundary condition to go short on the rally with R above. But had to exit with creation of HH.
http://www.sierrachart.com/image.php?l=137607736128.png
Price moved up yesterday with strength all the way to the top of the channel on the daily. Condition is now slightly overbought. ON has been largely sideways with no serious attempt to resume the advance. Range has narrowed during PM.
R: 2966 (multiple R through ON)
R: 2970 (yesterday's high)
R: 2979 (R from ON and PM of the 12th)
S: 2956 (from PM)
S: 2934 (mp zone of yesterdays climb)
0832/10 - Opening led to a fall to PM S zone and there was a quick rally recovering most the fall. Price then went through a normal reaction and found S above the mp level. An attempt upwards created a LH.
0832/55 - Small range and compression between 61 and 59.
0833/30 Price leaves range top and then retraces a bit. Opp to enter on the ret in anticipation of traders exploring the upside. The tight range below should provide S.
0834/05 BO is fizzling and chance to go back to middle of former range.
0834/40 Volume is very high with good amount of price range. Selling pressure meeting prior S point of 59. Price is currently in the middle of OH and OL with no clear direction.
0835/25 S zone of 59 halts the downwave. DB is created and the rally off the DB is strong so far. Opp to go long at low price risk if I believe that the LOLR is up. But why should I believe that? Price has tried to knock against R more than it has against S.
0837 Price making HH and HL's since the DB and climbing to test R again. The ret now offers another opp to go long in anticipation of breaking through R.
0838/40 Falls back towards S on very low volume indicating very little buying pressure.
0839/10 Breaches past S zone and LOLR is now down. Ret will offer opp to go short in anticipation of breaking through OL.
0842/40 Unusual for price to drift in such a narrow range at this time of the day. Currently just below the apex but may be just drifting.
0843/20 Climbs to the LH from the base of narrow range and reacts there. This may be the eventual break from all this congestion. Ret here offers long opp. Apex of the hinge would offer logical S zone for risk management.
0843/55 Rally meets R at thrice tested OH zone. Reacts a bit but there is a very strong volume surge leading to a small increase in price. This shows that there is large selling and buying pressure here. So an eventual break of R could go a ways. The SL at 60.75 provides a natural zone to determine if the LOLR is still up.
0845/30 Price bounces off the SL. LOLR is still up and the trade to break through R should still be on.
0850/10 The break encounters R shortly after breaking free of OH but none of the reactions are deep. It keep climbing and is now at the anticipated R zone of 66, which has shown to be strong previously.
0850/30 A big drop on high volume, confirming the R zone and indicating weakness and an opp to exit trade and stay neutral.
0852 Back down to OH zone which should now offer S.
0852/45 Flat movement at the mp zone of the upwave from 58 to 66. Neutral.
0853/45 The prior R not providing any substantial buying pressure and price dipping on the other side of mp. LOLR shifting down, unless there is a strong rally off the mp.
0855/35 Drops fast to bottom of the big congestion since the open. Speed of the drop indicating a likely rally. While the downwave from the highs to this point is quited extended, a ret will give an opp to go short in anticipation of a break of S and exploration of the downside, which would fit in with the larger overbought condition from yesterday.
0857/20 Very strong rebound from S and back into neutral. If I was trading ranges, the HL retest off S would have been a good opp to go long.
0900/20 The strong climb to R loses some pace but none of the reactions are deep. Don't want to go long here because the range has shown to hold and a long here would be after an extended run from range bottom. Short would be a better trade. But the strength of the climb and lack of any strong reactions does not make a strong case for short either.
0901/5 Reaction moves deeper and more confirmation of R to be holding. A rise back to R would now offer a good opp to go short.
0902 Short this rally at 64.75
0902/30 Price makes new high and the short would be exited.
Summary:
1: Price in the middle of opening high and low. Neutral.
2: Long opp on ret anticipating breaking OH.
3: S zone at 59 stops price and a DB created on the 5s giving an opp to enter long. But there was no compelling reason for a long bias here, as both up and down S/R zones had been effective.
4: If a long was taken, it would have been exited as hinge is being confirmed
5: Breach past S zone turning LOLR down but nothing significant happened to take a short position.
6: Break up the upside from the apex. Bias long with entry on downwave.
7: Ant R zone of 66 shows itself. Has been strong in the past and leads to scale outs.
8: Prior R not providing any S to the descending wave. LOLR shifting down.
9: Was thinking short here in anticipation of break but that would not have worked. Thinking short after an extended run right above S was a mistake. Better thinking would be to count on S and then observe the HL on the 5s as confirmation to go long. Even if the LOLR turns out to be down, there is likely to be a meaningful rally after such a fall and thus I would have the space to exit the trade in time even if it did not work.
10: Used previous logic to not think long here because of the extension and the presence of confirmed R zone of 66 above.
11: Used boundary condition to go short on the rally with R above. But had to exit with creation of HH.
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