Simplicity in TA

[JoshDance]

Quote from Xspurt:

4. I looked at your chart linked above and couldn't read Wyckoff off that. It looks more like Jack Hershey's volume reading. In order to answer your question and show exactly what this is based on I would like to check your Wyckoff reading of the 4hr chart attached. What does it tell you?

Well, I'm not really a "wyckoffian," I just use some of his principles, and some of the principles I use are probably from VSA, so I can't claim my perspective is really from that camp. But what I see is:

- nice volume base formed, starting 10 or so bars from the right edge (effort), and not a lot of further down to show for it (result) ... this would indicate to me that the bottom is not much further down

- in the large up closing bull bar, bulls have shown strength, however, the bears had two nice bars on good volume following this; the next to last bar is weak up, and the last bar closes in the middle on good volume, indicating that another push down, possibly into the 10750 area to test for supply, is expected; the last push down should be on lower volume, and then a rally up can proceed

What do you think? Would love to hear a good wyckoff trader's (such as you) thoughts on this.

 

[Xspurt]

Quote from JoshDance:

Well, I'm not really a "wyckoffian," I just use some of his principles, and some of the principles I use are probably from VSA, so I can't claim my perspective is really from that camp. But what I see is:

- nice volume base formed, starting 10 or so bars from the right edge (effort), and not a lot of further down to show for it (result) ... this would indicate to me that the bottom is not much further down

- in the large up closing bull bar, bulls have shown strength, however, the bears had two nice bars on good volume following this; the next to last bar is weak up, and the last bar closes in the middle on good volume, indicating that another push down, possibly into the 10750 area to test for supply, is expected; the last push down should be on lower volume, and then a rally up can proceed

What do you think? Would love to hear a good wyckoff trader's (such as you) thoughts on this.

I thought that was the case but needed to be sure - peaks and troughs are not much use for bar by bar Wyckoff because the objective is to get information from each bar. That's why I couldn't read yours as it was all one color over mountains and valleys.

Short on time so here are the salient points...

1. There was a peak sell bar followed 2 bars later by a peak buy.

2. There followed a push lower on lesser volume. This was the time to spill the market if the sellers were present. If the strong hands had the market it would hold and they failed to even take it down to a double bottom.

3. This set up gave me the expectation that they would push the market up next day (yesterday) allowing aggressive traders to get early longs in place.

4. Now we have buy candles on rising volume.

5. Looking at the daily volume buying has been rising while selling is decreasing.

6. We are on about twice the normal volume for this support level with both buying and selling having close to equal representation. and the weight is shifting to the greens.

7. This is not happening at a random point: the support was drawn in months back giving a credible bounce location.

8. On the daily the 1st big green volume bar was the 1st test and the red bar following gave the benchmark to measure the reversal from. Since then the reds hand is weakening as expected.

While we still need to get over the resistance point the clues were there to buy the low and keeps stops close rather than buy the break out hundreds of points higher with a wide stop.

The real fun comes in catching the next reversal if we break up as expected. Time permitting I will endeavor to post it intraday but as I am not trading this market it might be EoD. Anything can happen because the markets are so vulnerable to news events and nimble trading is required.

Hope this helps.

 

[LEAPup]

Quote from Xspurt:

I thought that was the case but needed to be sure - peaks and troughs are not much use for bar by bar Wyckoff because the objective is to get information from each bar. That's why I couldn't read yours as it was all one color over mountains and valleys.

Short on time so here are the salient points...

1. There was a peak sell bar followed 2 bars later by a peak buy.

2. There followed a push lower on lesser volume. This was the time to spill the market if the sellers were present. If the strong hands had the market it would hold and they failed to even take it down to a double bottom.

3. This set up gave me the expectation that they would push the market up next day (yesterday) allowing aggressive traders to get early longs in place.

4. Now we have buy candles on rising volume.

5. Looking at the daily volume buying has been rising while selling is decreasing.

6. We are on about twice the normal volume for this support level with both buying and selling having close to equal representation. and the weight is shifting to the greens.

7. This is not happening at a random point: the support was drawn in months back giving a credible bounce location.

8. On the daily the 1st big green volume bar was the 1st test and the red bar following gave the benchmark to measure the reversal from. Since then the reds hand is weakening as expected.

While we still need to get over the resistance point the clues were there to buy the low and keeps stops close rather than buy the break out hundreds of points higher with a wide stop.

The real fun comes in catching the next reversal if we break up as expected. Time permitting I will endeavor to post it intraday but as I am not trading this market it might be EoD. Anything can happen because the markets are so vulnerable to news events and nimble trading is required.

Hope this helps.

Agreed

Also, "Anything can happen because the markets are so vulnerable to news events and nimble trading is required." ABSOLUTELY AGREED!

 

[Zr1Trader]

I like to to look for the LPS (Last Point of Supply) LPD (Last point of demand) after price has been consolidating in a range for a while. Another setup I like are hammers with long tails that occur on high volume after the correct pre conditions have been met. There is a story being told on every chart. One thing that won't change no matter how many bots are out there is core principles with price and volume.

 

[LEAPup]

Quote from Zr1Trader:

I like to to look for the LPS (Last Point of Supply) LPD (Last point of demand) after price has been consolidating in a range for a while. Another setup I like are hammers with long tails that occur on high volume after the correct pre conditions have been met. There is a story being told on every chart. One thing that won't change no matter how many bots are out there is core principles with price and volume.

One thing I'd want to see is some follow through... You've got the volume @ 2.9B SPY traded this week. I'm ready to go shopping next week, but it's going to be extremely light.

Xspurt nailed it imo with being VERY nimble next week due to headline risk, and an already spooked market. Hope European news doesn't kick us in the face.:eek:

 

[JoshDance]

Quote from Xspurt:

I thought that was the case but needed to be sure - peaks and troughs are not much use for bar by bar Wyckoff because the objective is to get information from each bar. That's why I couldn't read yours as it was all one color over mountains and valleys.

Hope this helps.

Thanks for the analysis Xspurt. From my readings of Wyckoff, I thought he was more of a "big picture" guy who sometimes looked at individual bars, but other times looked at a cluster of bars. VSA analysis, which is not Wyckoff by any means, tends to look at EVERY bar and my understanding is that this was a big differentiating factor.

Thanks for the info, and have a great weekend!

 

[JoshDance]

Quote from Zr1Trader:

I like to to look for the LPS (Last Point of Supply) LPD (Last point of demand) after price has been consolidating in a range for a while. Another setup I like are hammers with long tails that occur on high volume after the correct pre conditions have been met. There is a story being told on every chart. One thing that won't change no matter how many bots are out there is core principles with price and volume.

Amen Zr -- "core principles with price and volume" ...

I can picture your LPS and LPD, but a visual would be great.

Reversal bars ("hammers with long tails") are my favorite thing to trade -- but as you say, the context must be there or they are great for luring in suckers. What type of conditions do you look for when trading these, besides volume? I like to look for them at predefined s/r levels, VWAP, etc., or after a second push at a high or low, preferably on lower volume than the exhaustive volume on the first push.

 

[Xspurt]

Quote from JoshDance:

Thanks for the analysis Xspurt. From my readings of Wyckoff, I thought he was more of a "big picture" guy who sometimes looked at individual bars, but other times looked at a cluster of bars. VSA analysis, which is not Wyckoff by any means, tends to look at EVERY bar and my understanding is that this was a big differentiating factor.

Thanks for the info, and have a great weekend!

Wyckoff is very much drilling down from the big picture into the bar signals. I tried VSA software but found it to be worthless.

Glad to help and have a great W/e too

 

[Xspurt]

Quote from LEAPup:

One thing I'd want to see is some follow through... You've got the volume @ 2.9B SPY traded this week. I'm ready to go shopping next week, but it's going to be extremely light.

Xspurt nailed it imo with being VERY nimble next week due to headline risk, and an already spooked market. Hope European news doesn't kick us in the face.:eek:

Nimble trading means getting in at the earliest sign of buying and reversing or exiting at the earliest sign of trouble. Longs are well into profit now and we are approaching the major1st Fib resistance level having got the follow through I expected.

Waiting for the same sense of security that the herd is looking for is exactly when the smart money may be looking to sell out.

 

[Xspurt]

I'll cover a few things I didn't have time to earlier. When is a Bear Engulfing a major BUY or a Bull Engulfing a major SELL signal?

Let's take a Bear Engulfing BUY signal as an example. PA reaches a support level and there is fear in the market. Salvation: it looks like buyers have come in with volume on a big green candle but then hopes seem dashed when next day there is a big red engulfer on heavy volume and talk is of a hard move down.

This is the last throw of the dice for the bears and earlier in the thread you can see how and why I was bullish intraday before this signal completed.

(I am not a perfectionist: I am looking to read the market sentiment and in this example the red engulfer is technically not an engulfer by the width of little more than a trend line and that's good enough for me.)

Note how close we are to the 0.38 fib and how volume worked out as expected confirming the move up. Also note volume level is back to normal.