Making of a method
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It's a couple of hours before the NY open, and, as noted in the post above, price has bounced off 2735, as anticipated. Thereafter, it reached the preceding trading range, again as anticipated (see previous two posts) but made it all the way to the top of the range at 68 (+/-), this being the second rally to this level.
This leaves four choices: (1) buy a breakout from this 58-68 range, (2) buy the retracement after this breakout, (3) short a fall out of this range, (4) short the retracement after this fall. Barring that, just sit and watch. Given that buyers have rallied to this point twice, the last off a higher low, strength is indicated. However, the fact that they have failed more than once to get past this level suggests weakness. And price technically remains in a downtrend (beginning with 5/22). Trends, however, do reverse, and price could rally all the way up to the low 80s. The trader therefore has to be prepared for either contingency.
This leaves four choices: (1) buy a breakout from this 58-68 range, (2) buy the retracement after this breakout, (3) short a fall out of this range, (4) short the retracement after this fall. Barring that, just sit and watch. Given that buyers have rallied to this point twice, the last off a higher low, strength is indicated. However, the fact that they have failed more than once to get past this level suggests weakness. And price technically remains in a downtrend (beginning with 5/22). Trends, however, do reverse, and price could rally all the way up to the low 80s. The trader therefore has to be prepared for either contingency.
Would you agree, db, that a short - wether premarket or not - at roughly 72 after the second test of 74.25 would be in terms of wyckoffian wave analysis indicating incoming selling pressure and would so be reasonable?
Apart from that I would like to chime in to all who are thankfully welcoming your great efforts and your continous willingness to help people finding their path to a sustain method (perspective).
I'm currently rereading your book and try to study the stuff you posted here and on TL.
Apart from that I would like to chime in to all who are thankfully welcoming your great efforts and your continous willingness to help people finding their path to a sustain method (perspective).
I'm currently rereading your book and try to study the stuff you posted here and on TL.
If you're referring to the value level traders found last week, that's old news. They may find value there again, but that would be coincidental. Resistance at present is at 68, plus the trendline above. As to wave analysis, that would depend entirely on the interval you're using. Given that we're in a trend channel on the daily, the selling waves for that interval are by definition longer than the buying waves.
Price has been moving sideways for nearly half an hour. This indicates indecision. Price may continue its upmove, reverse, or continue moving sideways. The successful trader will be prepared for all three contingencies and know exactly what to look for and what to do for any of those contingencies.
Yes, I was refering to the waves on the 1M chart. As for the daily, my "bias" would been rather long simpy because we took out the 6th low by only a bit coming close to the midpoint of the upmove. Volume gives no real clues here, would you agree? At least, there is nothing exceptional...
In terms of trend analysis, the length of the waves is apart from levels the main part in determining a potential direction?
I certainly have to read a lot of the Wyckoff stuff again and again...
Day 6 of 20
Prep:
3 day DL broken on the daily and price has Reversed the buying off lows that started on the 6th. It is back in low territory.
S1: 2917 (Top of prior TR from PM)
S1: 2910 (low of 6th)
S2: 2901 (S from overnight)
R1: 2926 ( Top of latest TR from PM)
R1: 2939 (MP of preceding downswing)
Price breaks TR at pre-market from 2913 to 2923 indicating immediate strength. But this is against a sharp sell off from 12th morning and price still has a ways to climb to meet the mid point of the sell off at 2939. See if the sell off continues if Price finds R at 2939.
http://www.sierrachart.com/image.php?l=1371493637310.png
Prep:
3 day DL broken on the daily and price has Reversed the buying off lows that started on the 6th. It is back in low territory.
S1: 2917 (Top of prior TR from PM)
S1: 2910 (low of 6th)
S2: 2901 (S from overnight)
R1: 2926 ( Top of latest TR from PM)
R1: 2939 (MP of preceding downswing)
Price breaks TR at pre-market from 2913 to 2923 indicating immediate strength. But this is against a sharp sell off from 12th morning and price still has a ways to climb to meet the mid point of the sell off at 2939. See if the sell off continues if Price finds R at 2939.
http://www.sierrachart.com/image.php?l=1371493637310.png