Son of If You Can Draw a Straight Line . . .
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Price for silver has moved back into the trading range and appears to be poking above the supply line. This is going to need close monitoring for any further developments as the trend might attempt to change from down to up. If price gets stuck in the trading range we'll have wait for a breakout of sorts again to see whether there is enough conviction in demand to propel the price up. Here again one must remain cautious as the break to be again to the downside. There definitely is increased volatility in the price movement of silver and similarly in the price movement of gold (not shown here).
Notice the trading range in blue dotted line and the supply line in pink.
Silver daily (futures):
Gringo
Notice the trading range in blue dotted line and the supply line in pink.
Silver daily (futures):
Gringo
About ENTRY at the turning point of NQ 9/30 by DB: Note also that the drop to 90 is also a test of the 0830 swing low. If one has tunnel vision, these movements are far more likely to shake him out of an otherwise legitimate trade. In Wyckoff terms, you have preliminary support, a climax, a technical rally, and a test. Both the climax and the test are legitimate entries for those who don't have fear issues. For the rest, it's like Indiana Jones stepping off the ledge in The Last Crusade.
DB: Would you please describe in the chart where is the preliminary support? you mean the swing low prior to the climax? So the key to
know the turning point here is to have the climax first. Wyckoff used volume to help identify a climax. How do you identify a climax? Attached is the NQ 1m chart of 9/30.
Sometimes, at turning point, there is not obvious climax. Like today NQ around 10:10 to 10:30 EST is having a turning point for this downward channel of range 6ps starting around 7:30. The range is small just good for scalping. Suppose the range is big, then how would you identify this turning point and how would you trade it?
About EXIT of NQ 9/30by DB : But recall that those charts from the first few posts are targeted at the fearful, particularly the pathologically fearful. This is why I go on to explain that one can exit at the break of a supply/demand line, wait for a breach of the last swing low/high, wait for a 50% retracement of the most recent rally/reaction, wait for a 50% retracement of the entire rally/reaction. Any of these as opposed to just sitting there and waiting for price to return all the way back to the beginning.
Note: I do not like the up TL using red color in the original chart and tried to upload a new attachment but every time it showed the original chart. So i deleted the post first and then resubmitted the post. The post was originally written at 7:47PST.
DB: Would you please describe in the chart where is the preliminary support? you mean the swing low prior to the climax? So the key to
know the turning point here is to have the climax first. Wyckoff used volume to help identify a climax. How do you identify a climax? Attached is the NQ 1m chart of 9/30.
Sometimes, at turning point, there is not obvious climax. Like today NQ around 10:10 to 10:30 EST is having a turning point for this downward channel of range 6ps starting around 7:30. The range is small just good for scalping. Suppose the range is big, then how would you identify this turning point and how would you trade it?
About EXIT of NQ 9/30by DB : But recall that those charts from the first few posts are targeted at the fearful, particularly the pathologically fearful. This is why I go on to explain that one can exit at the break of a supply/demand line, wait for a breach of the last swing low/high, wait for a 50% retracement of the most recent rally/reaction, wait for a 50% retracement of the entire rally/reaction. Any of these as opposed to just sitting there and waiting for price to return all the way back to the beginning.
Note: I do not like the up TL using red color in the original chart and tried to upload a new attachment but every time it showed the original chart. So i deleted the post first and then resubmitted the post. The post was originally written at 7:47PST.
Preliminary support can take several forms but they are all accompanied by a surge of volume. They can occur as early as the first drop out of a trading range and as late as the last swing low before a climax. The climax itself is preliminary support until it's tested. Until it's tested, it may be just another swing low. For more information, search the Wyckoff course for "climax".
As for how to identify a turning point and how to trade it, that's largely the purpose of your study. How I might trade it has nothing to do with the best way for you to trade it.
This was news to me with regards to the equity index futures.
Could you please elaborate?
DB: I found the following link is very helpful, to share with others. May you please point to other specific links most relevant to turning point trading? It is not urgent. Thank you.
Info on how to trade climax: particularly chart for ES 2008_4_21
http://www.traderslaboratory.com/forums/wyckoff-forum/5097-trading-wyckoff-way-archive-24.html
Ugh, I've been waiting to begin participating in this discussion for weeks, but there was an error with my account activation, followed by a mis-communication with the ET support that prolonged the delay even further. Anyway, it is resolved now, which is fortunate.
I look forward to sharpening each other by continuing to compare our thoughts and develop our understanding of Technical Analysis together. I've read the entire parent thread, along with this one, as well as game's journal, so hopefully I will be able to engage in relevant discussion with everyone involved in this thread within the relevant context.
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Gringo,
I read your Sector analysis thread, and I appreciate the contributions you've made. I may post there as well later on, but I am more interested in the analysis of Silver that you have been carrying on from time to time at the moment.
Can you help me to understand in greater detail what information you are using to hypothesize that Silver may be about to show some strength? I've attached a few charts with my initial analysis; hopefully the image scales to a readable size.
I am just not seeing any real indicators of a Trend Reversal at this point. I've included a quick look at GLD as well just because the arbitration and correlation between the two sometimes can provide additional insights in the probable direction of the other. As you can see, I agree that perhaps there is an opportunity for Silver to try again to breach the long-standing downward trend-line as show on the yearly snapshot, but I am doubtful of its capability to penetrate that Supply Line, let alone begin a reversal.
Perhaps I am missing some key factor here, or it could be the case that I am misunderstanding the interval that you are working around, and the probability of a move up to somewhere around 25 is the potential strength you've been alluding to. Anyway, look forward to hearing your thoughts.
I look forward to sharpening each other by continuing to compare our thoughts and develop our understanding of Technical Analysis together. I've read the entire parent thread, along with this one, as well as game's journal, so hopefully I will be able to engage in relevant discussion with everyone involved in this thread within the relevant context.
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Gringo,
I read your Sector analysis thread, and I appreciate the contributions you've made. I may post there as well later on, but I am more interested in the analysis of Silver that you have been carrying on from time to time at the moment.
Can you help me to understand in greater detail what information you are using to hypothesize that Silver may be about to show some strength? I've attached a few charts with my initial analysis; hopefully the image scales to a readable size.
I am just not seeing any real indicators of a Trend Reversal at this point. I've included a quick look at GLD as well just because the arbitration and correlation between the two sometimes can provide additional insights in the probable direction of the other. As you can see, I agree that perhaps there is an opportunity for Silver to try again to breach the long-standing downward trend-line as show on the yearly snapshot, but I am doubtful of its capability to penetrate that Supply Line, let alone begin a reversal.
Perhaps I am missing some key factor here, or it could be the case that I am misunderstanding the interval that you are working around, and the probability of a move up to somewhere around 25 is the potential strength you've been alluding to. Anyway, look forward to hearing your thoughts.
Hi Heroic,
Welcome to ET and this amazing thread. From what you have posted and the questions you ask, it is evident that you've done your homework. I'll attempt clarify my comments but you already have an idea why the message I am giving is a bit confusing.
For SLV the trend has been downward. It's in the larger context still down. I am not advocating SLV ending this long term down trend and moving up to end it's bear move. That being said, if you look at the weekly line chart you'll notice that I am cognizant of the fact that a rise from here 'could' turn into a larger term move. It would be akin to having a higher low or a successful test of sorts. Because the price traders follow price, this prediction business is a bit out there and not beneficial for the gains.
The large drop from the trading range leading to a snap back into the trading range has given us a clue. This price behaviour showed us that the demand wasn't fooling around when price went below the trading range and overwhelmed supply within a day. This doesn't mean there is enough demand to break out to the upside from this trading range, but it does show that pushing price down failed! Usually price would have continued down the path of least resistance, but there was resistance to be encountered on the way down. The path of least resistance if not down, then has a higher likelihood of being sideways or upwards. You know by now that there's no certainty as to which way price is going to go and when. Price could, as mentioned in previous posts, actually start going down again. But, for the time being demand hasn't allowed the downward movement to continue and that's the last information we have. Until new information shows up we trade on the information that down is a no go for now.
I hope my explanation was sufficient enough. I prefer to trade when there's a successful test, which was the case a few weeks back. Now price is in a middle of it all and a bit more alacrity and finesse is required to pick which way it's heading. This is the area where as Db, mentioned the situation gets a bit murky. It gets harder to predict and the fear factor increases a bit. I am not completely devoid of this queasy feeling of being in a no man's land. Perhaps its because my plan is more geared towards a successful test than playing these range breakouts. Although I have plans for that the my risk tolerance may be a little averse to the situation we're in. That's one of the reasons I am continuing to post more so as to not let this opportunity go by without learning from it and documenting it. We're all learning, most of the time.
Gringo
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