NQ Price Action Journal

N

niko

I am going to start the process of trading NQ, I have not been very fortunate with it so far, so I will start from the beginning, with screen time and notes of what I see in real time. I will use mostly market replay, in order to accelerate the learning curve, and will look at it live (without buying or selling any contract during the first weeks).

Let´s see if I can get an Aha moment.
 
July 1 2013

1.At the open we were on the second RET of the Uptrend that started around 9:00
2. After a strong upswing the market found R at 32 which was important in the middle of june. At the R level there was no more interest of buyers of taking prices higher so a DT formed, then after a new failed attempt to break above 32 sellers pushed hard just to find S around 28, which was the top of the premarket hinge (5min chart)
3. Following the strong upswing came a new RET, at that time the market had accelerated above the normal pace, but buyers were still interested, taking prices al the way to 46.
4. A new RET, but this time buyers could not hold it for much longer, after a failed HH, there was a strong downswing and a break of DL, clearly both bearish signals.
5. After a break of DL, my though was REV, this was a failed REV.
5.a. After the fail of the REV, buyers also failed to take prices higher, so as both buyers and sellers had been unable to get a following the conclusion was Chop.
6. Sellers made a timid LL and then buyers failed to defend their previously aquired territory, so the bias was bearish again. There was a moment during which there was only paint drying but all Last Swing Highs have been respected, so no reason to panic the bears.
7. After pushing out of the congestion and breaking the DLs, sellers gave up before breaking the MP of the uptrend from 9:30-9:45.
8. After a pierce of the SL from 10:00 Sellers defended R at 42, turning the attempted uptrend into a chop.

The screenshot is attached.

Glossary:

HH: Higher High
LL: Lower Low
DL: Demand Line
SL: Supply Line
REV: Reversal
RET: Retracement
BO: Breakout
FO: Fakeout
MP: Midpoint
LSH: Last Swing High
LSL: Last Swing Low
DT: Double Top
DB: Double Bottom
R: Resistance
S: Support
 

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Your analysis is fine, but you're ignoring the context that you went to so much trouble to provide.

Price has been on an uptrend for several days. Given the trend channel that you've drawn for the hourly and the midpoint of the trading range between 2905 and 2998 on the daily and the fact that they intersect at 2950, one can suppose that the LOLR is up and use every excuse to stay in long. One rarely gets a straight shot, and your double top at "4" may be all that buyers can achieve during this session. But until that occurs, there are no justifications for any shorts.

Therefore, the context is telling you that the bias is up. Unless and until that changes (the break of a demand line, a double top, etc), then the LOLR is up, and if you're in, and you would have been at or before the open due to all these messages from the buying gods, then there's no reason to exit, and even a good reason to pyramid.

Incidentally, you say that "there was no more interest of buyers of taking prices higher" at "2". But buyers haven't left the field. They're at least interested holding prices where they are or else prices would fall. So the fact that they don't fall is a positive for a long.
 
Quote from dbphoenix:

Your analysis is fine, but you're ignoring the context that you went to so much trouble to provide.
More...


Typical of me, working on that. I managed to take into account the prelim S/R levels, but that was it. The rest is just decoration :(

Quote from dbphoenix:

Price has been on an uptrend for several days. Given the trend channel that you've drawn for the hourly and the midpoint of the trading range between 2905 and 2998 on the daily and the fact that they intersect at 2950, one can suppose that the LOLR is up and use every excuse to stay in long. One rarely gets a straight shot, and your double top at "4" may be all that buyers can achieve during this session. But until that occurs, there are no justifications for any shorts.
More...

I trace the channels, but still don´t really know how to use then in decision making, I was thinking that as the DL held until 5, the bias was bullish. At 4 I couldn't´t find anything in the hourly that I could assume as prelim R, therefore I was not sure about changing bias just yet. The other reason I thought about at the moment was the fact that I was still above the trend line from 9:20, from what I have seen in oil whenever one gets trapped between 2 lines it usually means a choppy trip between them.

You say that the fact that the MP of the TR and the TC intersect at 2950 is important, why?

Quote from dbphoenix:

Therefore, the context is telling you that the bias is up. Unless and until that changes (the break of a demand line, a double top, etc), then the LOLR is up, and if you're in, and you would have been at or before the open due to all these messages from the buying gods, then there's no reason to exit, and even a good reason to pyramid.
More...

Given the fact that at 4 we are already in the 5th RET (The first one being at 9:20 after the HL and SL break at 9:10) isn´t this a low probability long? I mean for considering pyramiding.

Quote from dbphoenix:

Incidentally, you say that "there was no more interest of buyers of taking prices higher" at "2". But buyers haven't left the field. They're at least interested holding prices where they are or else prices would fall. So the fact that they don't fall is a positive for a long.
More...

My reading at the time was that we had reached 32 and prices just stopped climbing, it was pure chop in the tick so i decided to look left and found that that level had been S in the 14th and R in the 20th of june. The failed attempt to break to the upside around 9:47 confirmed that (although we were still above the DL so a short was not the option). Then came the strong bounce to the upside that got me off guard and that broke the opening range TR. If I had a long stop before that bounce I would have possibly cancelled it as the LSL was broken before price skyrocketed.

But then again I never consider something that you always tell me, the fact that what is anticipated does not happen is also a reason to take action


Thank you DB for your comments.

I will incorporate more context analysis into this exercise tomorrow.
 
Quote from niko:


I trace the channels, but still don´t really know how to use then in decision making . . .

You say that the fact that the MP of the TR and the TC intersect at 2950 is important, why?
More...

If the trendlines and trading range limit lines aren't used in decision-making, then they're just lines, and useless. But the lines trace demand and supply, or buying pressure and selling pressure. Therefore, if for example a demand line holds, the buying pressure isn't there because of the demand line; the demand line is there because of the buying pressure. Once the buying pressure evaporates, so does the line, which is what you want to know in order to make a trading decision.

When price bounces off the lower limit of a trading range, it can be assumed that it will travel at least to the midpoint of that range bec of mean reversion. That's what happens in an auction market. Therefore, your LOLR was up at least until you reached the midpoint of your trend channel, at 2925 or so. When it cleared that, it could be assumed that price would go all the way to the opposite limit, at 50. That this coincided with the midpoint of the trading range you delineated on the daily suggests that there are two areas of resistance to face: the upper limit of the trend channel and the midpoint of the daily trading range. Until you get to 50, though, you're good.

This does not mean that 50 is a guarantee, though. Buyers may stall out before that point, as they did here at your double top. But 47 is close enough, and the context helps stop you from exiting a long prematurely. The market is on your side. It wants to give you money. Let it.

Quote from niko:

Given the fact that at 4 we are already in the 5th RET (The first one being at 9:20 after the HL and SL break at 9:10) isn´t this a low probability long? I mean for considering pyramiding.
More...

Yes. But, as you point out, there are multiple retracements. If you enter at 0900, you can pyramid at 0910 and 0920 and 0930 and 0950.
 
Daily:

We are at the MP of the current TR between 149 and 53.

60 min

After finding R around 109 sellers pushed hard and sent prices inside the congestion area. Premarket sellers found S at 91. Not sure why.

5 min

We are in a TR between 91 and 100.

So far it looks pretty choppy for me.
 

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