Making of a method
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i say yes but it aint easy, the same principles apply thou , supply and demand , selling/buying pressure / exhaustion , effort vs. result
especially at the extremes , for example if activity increases at sup.
and price respects the sup. and rallies .. is that strong ? or weak ?
how does price react at res. ? does it get rejected cause there is
no interrest in trading higher atm? (unfair high) or do the bears
fight to hold their ground ? , if so how long can they stand their
ground each visit ? who is in charge ? how long can they
withstand the battle till there are no sellers left and the balance
shifts in favour of demand, again its all about strength and
weakness
but then again why bother ? just play the extremes (reversals) or wait for the breakout + pullback
an example on the fdax 1h , we have a range atm , now
the most recent action is rather strong then weak , and the
preceding action almost was the same , after a sharp drop(A)
we came to an halt near sup. price started to rallie (XXX) even on
low activity indicating that sellers are done for the time beeing ,
then price reacts at arround the MP (YY) activity increases but we
make no real downward progress even rallie at the end again..
if those and other signs of srenght occure over and over again
within a range , it is just a mather of time till it breaks out to the
upside , but then again .. anything can happen..
zoomed in on 5min
Went through some examples of range behavior today. Seeing some potential in BO anticipation entries - given the right context of course. This is just an idea right now and not part of the trading plan.
The trend run out of the Range on Friday was very interesting (from the chart posted on Fri). Price gets compressed at S and then just explodes right through R on it's way to a trend run.
With reference to Ranges, the two things I am focusing on while observing are:
1. Instances of compression at S or R
2. The change from back and forth choppy movement to movement with a certain order - and the implications of this change for potential Range BO.
Wyckoff was good at breakout anticipation and it was the only kind of breakout he'd mess with. I'm not, except on rare occasions, so I rarely take the risk.
But if you want to play with it, you're going to have to become adept at recognizing these compressions and the increase in activity that generally accompanies them prior to an "explosion". For that you'll have to view a tick chart. It may drive you crazy, enough so that you won't want to mess with it, but trying to detect these compressions without it will likely be frustrating.
And by "tick chart" I mean 1t. I don't see the point in multi-tick charts. Why not just use time?
the compression on S (hinge) per se is rather weak then strong,
i mean indecision at support ? , but one could of course bracket
the hinge , or wait till this indecision gets resolved , like it did on
your chart.. and trade the retr. ..
i like and play occasionally the breakouts that come with
compressions at S or R but then again with context like
where does the S or R occure (level) , how does price act? ,
what do most people excpect price should do at such level?
and if price doesent do what most excpect/predict/anticipate
who gets hit between the eyes ? and how should you position
yourself to profit from it ? but then again its a rather aggressive
entry
similar to this Long play i did .. last week
http://elitetrader.com/vb/showthread.php?s=&threadid=278394&perpage=6&pagenumber=3
the whole scenario happened at 50% mark of a preceeding down
wave , not a real range but has some similarities on how i would
play that even in a range formation thou..
FT Day 27 Sept 30
R: 3215
R: 3210
R: 3207
S: 3196
S: 3183
Context: Price showing signs of heading to the lower DS line on the Daily. 3196 is an important S level. Either it will bounce price back into the range or there will be a breakdown to 83 and then to 63.
http://www.sierrachart.com/image.php?l=1380543150906.png
R: 3215
R: 3210
R: 3207
S: 3196
S: 3183
Context: Price showing signs of heading to the lower DS line on the Daily. 3196 is an important S level. Either it will bounce price back into the range or there will be a breakdown to 83 and then to 63.
http://www.sierrachart.com/image.php?l=1380543150906.png