Making of a method

June 14

Price retraced yesterday after the overbought condition of the 12th. But it was still well above the mp zone. Since the close, price has been climbing up. This climb is now retracing. The normal reaction yesterday and the climb during ON and PM suggests strength. But price is right back up at top of channel. Bias is long.

S: 2960
S: 2957 (SL)
S: 2950 (mp of upwave since close of 14th)

R: 2973 (SH from 12th)
R: 2969 (thrice tested during ON and PM)
R: 2964 (from PM)

0834/05 Price trended up after open crossing first R zone easily. But has lost momentum with some upwards drift action just underneath the prior tested R zone of 69.
0834/50 Rev in progress. Current LOLR is down because a) price has made an extended move from the open b) It has lost momentum below the ant R zone of 69. c) It is reversing. Short could be taken after watching the behavior of the ret.
0835/40 The rally made up all of the prior Rev. This is a show of strength. But it is likely due for a reaction. Try the short here since the high at 69.50 is close by.
0836/50 Price goes a little past the mp zone and then rallies. If the rally shows weakness that confirms LOLR as down, it would be a good place to add to the short.
0838/20 Rallies off the prior R and now S zone of 64 from PM. Meets R at the previous SH level of 66. Watch the action at 64 to determine if bias changes to long and if that would be a good place to get a good position for the overall long bias for the day, now confirmed by the uptrend since the open.
0838/55 Price finding S. Can exit some here. But short still on.
0840/25 Since no short LOLR anymore, use the reaction to exit.
0842/20 Price drops quick. Since bias is long, lookout for opps to get in as price nears S zone of 64.
0848 Scale out some as price stalls at anticipated R zone of 73.
0849 Reversal dips below mp zone. This is also the former R zone. Opp to add to longs here if there is more confirmation of S here.
0851/40 Fall after sideways action is brought back to form a HL on the 5s. Opp to go long here since S is being confirmed.
0857 A DT has formed by now but price has not reacted much either. Stay in the long trade because long bias has been confirmed and a lot of trades below.
0900 Thrust forms new high but is quickly brought down. R is strong here. Scale some out.
0905 Neutral

Summary:
1: See price reversing off the ant R zone. Selling pressure and LOLR turning down but not confirmed yet.
2: The thrust above is quickly brought down. R being confirmed. Short on the rally with the high of 69.50 close by.
3: S coming in from the previous R zone of 64. Some exit here
4: Long pressure. Use the reaction to exit the short.
5: Long bias. Looked for for confirmation of S via the 5s HL. Used the reaction to go long close to S.
6: Faltering right below R. Exit some
7: Use the reaction to add to short after confirmation via the 5s.
8: Exit some on flat pace and rejection of thrust.

http://www.sierrachart.com/image.php?l=1376114951652.png
 
July 15

The strength of the 11th was followed by reduced momentum on the 12th with small range shown, although there was a higher close. Steepness of the climb from 11th and the loss of momentum on the 12th points to overbought condition that is getting ready to react. Bias neutral/short.

Drifted higher after Friday's close and found R at 3073. After selling down some from there, has been sideways in narrow 2 pt range. Most recently left the range in an upthrust.

S: 3067 (Range from PM)
S: 3061 (mp of upwave from lows of 12th)
S: 3043 (High from May 22)

R: 3073 (High from ON)

0831/15 Upwave found R at 73 and bounced off. Currently in an attempt to retest R. Bias from prep was short. This retest rally could be a good position for a short. R is only 1 point away.
0833/50 Down Pressure not seeing any major S at Open.
0835/25 Stopping at 68 which is middle of range from PM. Volume of the downthrusts in this congestion is very small, indicating that supply pressure may be over for now. Good chance of a rally here. But bias still short.
0836/55 At bottom of range from PM and stalling a bit here. Has fallen 6 points fairly quickly from high. Due for a rally. Can exit some here and scale back in on confirmation of weakness once the rally meets SH R zone of 69.
0838 Weakness being shown during the rally attempt. Scale back into short.
0840/20 Another rally underway. Look at how it acts at the R level of 67 and decide whether to scale in or out.
0841/15 Pace flattening a bit. Use the recent fall to scale out some.
0844/55 Faint buying pressure emerging on the 5s as the rally creates a HL and touches the DS line. Extent of fall indicates likely Rev attempt. Getting close to mp zone. Exit all here. Bias still short. Look for rallies to re-enter.
0846/10 Meaningful Rev attempt. Look for longs opps to anticipated reaching mp zone of 68 on the upwave.
0847/35 The rev finds R at SH level of 66.50 and falls sharp. Can't commit to either long or short yet.
0849/25 Very high volume spike leads to just a small drop in price. If the SL of the rev wave is used as support, a long can be taken now in anticipation of reaching the mp zone of 68.
0851/05 Price breaks free of R level of 67. Volume spike leads to good extent of move. Heavy buying pressure.
0852/45 Flat for last 90s at mp zone. LOLR still up unless the 67 level is breached.
0854/15 Climb finds R at SH level of 69. Creates a rapid DT and then a LH. Scale some out here.
0855 R at 69 suggesting that up pressure has finished. Exit all long here. Price has not breached too far beyond mp zone. Watch how rally behaves to go short close to the 69 R level in anticipation of larger downtrend continuing .
0856/45 Rallies to off 66 to 68. If this is the crest, then sell stop can be placed below as price turns down.
0859/10 Price has moved down and LOLR is being confirmed. Currently rallying. Use the SH and previous congestion level of 68 to determine whether to turn neutral or not.
0900/55 Price being compressed at 67. Exit on upside pressure from compression and scale in on downside pressure.
0901/40 Breaks down from apex. Look for rallies to add to short. New R zone is 67.25
0902/05 Rally. Sell stop below.
0902/30 Crosses R zone 67.25. Exit all. Too many trades here since the original Rev wave at 0846. Neutral for now as value zone being formed.

Review:

Some confidence built today. Getting more comfortable with using the 5s to look at the action around S/R forming in real time and using rallies to short and reactions to go long.

Finding value in being attuned to immediate pressure via the 5s, while using the prep work and 1 min to keep perspective via anticipated S/R levels and the action around these levels that determines the LOLR.

http://www.sierrachart.com/image.php?l=137624786245.png
 
July 16

Made another small range higher close yesterday. The momentum slows, though price is climbing to make new highs. Overbought condition.

S: 3072 (thrice tested from ON)
R: 3078 (PM high)

0832/10 Rejected at R and in downtrend going past open level. Currently rallying. Wait for confirmation of weakness.
0833/50 Rev attempt topping. LOLR short.
0834 Strong move up
0834/40 Move sells down back after creating new high. Neutral.
0837 Secondary S forming at 76 with OL below at 75.
0838/20 Rallies off S from OL. Wait for reaction to buy.
0838/45 Buy on drop.
0841 Reacts off mp zone of range at 77.
0842/30 Exit as price returns from mp zone back towards S
0843/10 Not much buying pressure as price arrives at S of 75. Wait for break of zone.
0844/30 Breach of S was not followed by selling pressure. So buying finally comes in for a strong rally on high volume.
0846 Breaches S again. Has been drifting down with flattening pace. Is likely to break strong in either direction from this zone.
0846/05 Short with SH level of 75.50 as R.
0847 Exit.
0900/15 Moving in a pt range. Has been a lot of push and pull today with no long lasting waves although the general direction has been down.
0904/30 Finally breaks from the hinge crossing R of 77
0917/05 Upwave stalling at R zone. LOLR short.
0919/10 Rallies just above the mp zone of 77
0920 Neutral as price rallies strongly back to entry.

http://www.sierrachart.com/image.php?l=1376350493775.png
 
July 17

Yesterday's downward thrusts were repeatedly bought at the 64 level. Price again fell sharp ON and found strong S at 65, resulting in a strong rally that retraced a bit and then shot up again to a high of 82. Currently undergoing a normal reaction to that rally. The small ranges of the last few days after a steep climb indicates a likely downmove, likely back to the S level of 64. Immediate PM action suggesting some weakness.

R: 3082 (High and retest from PM)

S: 3077 (SL)
S: 3072 (SL)
S: 3066 (S from ON and thrice yesterday's session)

0833 Downwave from open slowing down at S level of 77. Will wait for either a) A rally that finds R above and confirms overall weakness or b) Confirmation of S at 77 that could provide an opp to go long close to the bottom
0833/50 More weakness than strength around the S zone.
0834/30 Shoots up from S on high vol.
0835/45 Weakness shown here would make it a good short. The climb was fast so area under is thin.
0836/30 Fall was too fast without any rallies to enter short.
0838 LOLR shifting long as HL's being made
038/45 Long in anticipation of breaking R zone of 80. HL zone of 78 is the S behind me
0840/15 Past OH and now at the high from PM.
0841/55 triple R at 84 on the 5s slowing pace. Exit some.
0844/05 Crosses SL and buying pressure is not coming up fast. 2nd exit.
0845/10 Seeing weakness in this move. Exit all so mind is clear for new opps. Next level to watch is the mp zone of 81
0846/25 LOLR is down because LH's being made despite price finding S at mp zone of 81.50. R level behind the short is the SH of 83.25.
0848 Vol spike at the HL off S zone at 78. Hold.
0849/15 Exit some as rally seems to be finding S and pace flattens. Next level is the mp zone at 80.50
0852/45 2nd exit as price stall at the SL level from PM at 75. LOLR still down.
0854/25 Add to short as rally meets R at 78
0856/05 Exit all as retest attempt HL starts getting confirmed. LOLR shifting long. Look to go long on reactions.
0859/40 Hesitated at the entry on the deeper reaction. Enter now on the smaller reaction in anticipation of breaking R of 78.75. The S behind is at the SL of 77
0900/25 Exit at price crosses S level. Neutral.
0902 Got shaken out earlier. Price knocking against 78.75 and forming HL's as well. Pressure being built and LOLR is again up. Wait for the move out of the compression.
0903/45 R is holding and neutral again. LOLR will shift down if price moves down from compression after having failed to break R.
0904/10 LOLR shifts down. Short in anticipation of larger swing continuing down. R level of 78.75 above for risk.
0906/20 Exit as price rallies strong back to R level and retraces shallow. LOLR long.
0907/20 Long with a tight stop at 78.50
0909/35 Exit as price comes down from mp zone of 80

http://www.sierrachart.com/image.php?l=1376363631416.png
 
July 18

Buying came in ON to take price just a little bit above yesterday's close. Has been retracing since, but immediate trend still up. A lot of up and down swings yesterday.


S: 3075 (SL from PM and mp zone of upwave from 69)
S: 3070 (from ON and yesterday's low)

R: 3082 (PM high and SH from yesterday)

What is the LOLR?
Why?
Where is nearest S/R?
What is the approx price and info risk weighting?
What has to happen for LOLR to turn neutral or opposite?

0833/35 LOLR down. See how 76 level holds.
0837/20 Rally but downmove seems extended for now and don't want to get short here.
0839 Pace flattening and LOLR turning. Too soon for a long.
0840/40 At mp zone. If weakness develops here, it would a good place for a short.
0842 Short as price rallies towards mp zone. R behind is at 76.50
0844 Rally recovers all of the down move and then shoots up on high volume. LOLR is up.
0845/10 Long as reaction turns into rally. S is the SL level of of 74.50
0847/20 Thrust on high vol hits prior R level of 77.75 and turns down.
0848/15 Exit and neutral.
0853/50 Pressure has been consistently down since the rejection of the upmove. Breach below low brought back inside. Still neutral for now.
0856/15 Strong run from lows back towards R. LOLR is up. But run is extended. Wait for confirmation of S.
0900 Compression breaks down but is quickly brought back. Since LOLR is up, this move back up from the reaction stops in the trade. S behind is 74.25. Trade is in anticipation of breaking out of the Range top.
0900/50 Exit as price bounce fast with strength against R. Neutral
0909/15 Move from bottom of range breaches it. LOLR up.
0912/20 Long as reaction turns to rally and makes HL on the 5s. S level behind is the reaction low of 77.25
0915/55 Pace flattens at ant R zone of 82. Exit some. LOLR still up. Look at OL level of 79 for indications of S should price turn down.
0922/25 Climactic action over the last few bars on the 5s. Rise is steep on high vol to R zone.
2nd Exit as price reaches R zone of 84.50 and move is now extended.
0923/45 Exit all as DT created on the 5s.
0926/45 3rd attempt to go past high rejected. LOLR turning down, although there has been no substantial reaction yet.
0930 Sideways narrow range action here at top. Neutral.
0931/25 LOLR Down
0932/55 Short as rally turns back down. R behind is the prior S of 83 shown during the upmove
0936/30 Exit as no movement

http://www.sierrachart.com/image.php?l=1376439204908.png
 
July 19
Drifted down a bit since the sell off from yesterday. S was retested at 39 during PM. If S is confirmed, could make a rally attempt to mp zone.

R: 3048 (from PM)
R: 3056 (SH from yesterday)
R: 3059 (mp zone of downwave from yesterday)

S: 3039 (retest from PM)

0835 Price flattening. Look for confirmation of S at 41 to establish LOLR as up.
0836/25 Price falls through 41. LOLR down. Look to short rally as it approaches R zone of 43.50
0837/05 Short
0837/55 Exit as HL is made and price compresses against R zone. LOLR is up.
0838/10 Long
0839 Exit
0841/35 Breaks OL of 38. LOLR remains down.
0844/05 Pace slowing at 36
0849/40 Drops back to lows and creates a slightly HL. If S is shown here, would be a low price place to buy.
0851/20 Rises from lows. LOLR up. Look to buy on reaction
0858/40 Upwave from lows finds R at previous zone of 40. Reaction making HL. LOLR will turn up if price towards R again.
0901/05 Sideways movement leads to sharp thrust followed by reaction. Stopped into long in anticipation of breaking past R.
0902/05 Exit
0911/05 Prior rejection from R finds S and buying pressure seen making HL's. Immediate S at 38.75 and long to be stopped in if price hits 39.75
0912/30 Long
0914/30 Exit
0915/45 Breaks down from congestion. LOLR down.
0921/55 Breaks through S at 35. Look to see if ret goes back in. Look for rally to go short.
0923/25 Long as BO ret back inside range and then creates a HL on the 5s. S at 34.50
0925/20 Exit

http://www.sierrachart.com/image.php?l=1376525959903.png
 
July 22

The Sell down from the 18th reduced pace on the 19th, with a S zone forming at 31. The upwave off this zone sold down during ON. A S zone at 40 formed ON and was retested during PM. Current LOLR is up because of S shown during the 19th and the retested S from PM.

R: 3050 to 3052 (ON high and 21st high)
R: 3059 (mp zone of big downwave from 18th)

S: 3040 (Retested S from PM)
S: 3031 (multiple S from 19th)

0830/05 14 point strong upwave easily overcoming all R. Just finished some climactic buying. Likely to retrace.
0832/40 Reaction at mp zone of 48
0835 Big range between high and resumption of trend from mp zone. Neutral here as not close to any boundary zone.
0837/30 Flat against R of 52.50 above. LOLR turning down.
0840/55 Breaks below SL at 46.50.
0847 Back down to start of upwave and acting flat. Neutral.
0847/50 Slight up pressure. LOLR turning up.
0848/20 Reaction offers opp to go long with S close by at 40.50. Long stop at 42.25
0848/30 Long
0851/30 Price dips just below low. Give it room incase there is shakeout here.
0853/15 Exit
0859/50 Lot of trades at the 40 S level. Selling on high vol. Long as this selling stops and selling pressure weakens.
0907/15 Add to long in anticipation of breaking past R level of 42.50.
0912/55 Price reacting from mp zone of 45.50 and right at DS line.
0913/25 Exit some as price crosses DS line. Mp zone of this past upwave is 42.50
0914/55 Price turns up from mp and forms a HL. Add to long.
0918/25 Exit 1/3 as pace flattens
0919/15 Exit 2 as price crosses DS line.
0922/15 Exit all

http://www.sierrachart.com/image.php?l=1376536745244.png
 
Price moves in waves of selling and buying pressure.

There is often a loss of pace and extent as waves encounter previous S/R zones.

The loss of pace and extent is caused by the number of transactions in this zone. This creates current S/R.

The quality of action around this S/R zone conveys information about the emerging LOLR.

Entry on the emergence of LOLR creates a low price risk entry.

The specific price and info risk combination for entry will be determined by contextual factors such as the previous action around S/R, the extent of the main swing, the speed of the last thrust of the main swing, etc.
 
Quote from dbphoenix:

Can you elaborate on this?
More...


I was thinking of a Ferris wheel as it loses speed and hangs just before the down swing. By 'current' S/R, I was referring to the transactions that are causing the hang, thus strengthening the prior S/R zone.
 
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