switching gears to Price Action via SLA

[gears]

Today was one of those days that I think will stick out in my mind for a while. It was as if the whole AMT thing clicked for me. I had a number of areas marked out on my chart - PDH, PDL, swings, etc. Not all of them will be important in the same way, but they're there to mark an area where traders could no longer find trades - thus they're important for some reason or another.

So price started out after the NY bell rang and it hit 4445. Well 4445 has been kind of popular the last few days - it was the high on the 20th, the 50% area of the overnight action into yesterday and it acted as support in last nights' action. So when price opened, hit it and quit it for pastures further south, I took notice.

If heading south, where's the next likely stop - 4435. Well, price tried 3 times to get down there and it couldn't - and after each time, it found resistance at 4445.

So then it pops through 4445 --- where might it go next -- to the overnight high 4449.25. Like the earlier movement, it took the 4th try for that area to be penetrated. Things went sideways for a while and then it popped up to the 54 area - yesterday's high.

It was like a lightbulb went off --- if it's heading up, what might be the destination. If price can't/doesn't get there, where might it head then? I enjoyed watching it play out.

And while I was typing this, the NQ dropped all the way back down to 36 surpassing where traders were this morning. Good stuff.

 

[gears]

Today was a day where I wanted to JUST focus on the extremes (PDH, PDL, 50%) area, but price didn't hang out in those areas much. A bit of a range formed in the overnight so I was mostly looking at 4464, 4458 and 4452 when the NY bell rang. I'm not sure if I should "turn off" the running commentary when price is sort of in no-man's land… Sometimes price moves very quickly through there to something else and if I'm not paying attention, I will likely miss it.

1. Price couldn’t quite make it up to 64. An SLA RET after confirming the overnight range high would not have been triggered - always a sign that price may go the other direction. It was interesting to watch price hover around 61/62 - the overnight range high. What had been resistance turned into temporary support.
2. Pretty quick trip down. Then hanging at 52 for just a moment before heading further south again.
3. Sellers looking a little lonely here for the moment.
4. Pretty steady march up. Brief pause at 55 (overnight swing low - support was now resistance) made sense. It really is quite amazing how identifying certain areas and then seeing subsequent price behaviors at those areas. Where the traders have been, they are again.
5. Pretty much blew through the 58 area.
6. Pausing again (congestion) at 61 again.
7. Again back to 58. This time at the upper end, price made a LH than earlier and has yet to get to 64.
8. Quick direction change - (hot potato-like) - definitive failure at 56.
9. HUGE DROP down to 52. Again a pause…
10. And then a shot up --- heading back to 62 again? Like previously, taking a breather at 55.
11. Pace has definitely slowed down, but price made it back to 58 again. Seems to be having a harder time with the up trek than the down one this time around… Slowly but surely forming a hinge (from a broader perspective).
12. Buyers looking kind of lonely up here.
13. Bounce off 58 to a LH.
14. Price cruised through 58 on the way down, but price range seems to be tightening.
15. And then a pop up of movement followed by a virtually instantaneous failure of that price point. Price hanging out around 60.50 similarly like it did right after the open.
16. Price doesn’t quite make it back to 58 before heading higher.
17. Finally figured it out that even though the PDH was around the 64 area, traders are telling me that the resistance area is at 62. I’ve marked it and then see price reject it. Also the first time price exited the hinge.
18. Price slows somewhat at 58, but cruises down to 55 and does an about-face. 55 is still popular. Price exited the southern part of the hinge this time.
19. Price barely poked out of the upper end of the hinge and again couldn’t make it to 62.
20. Dropped like a bomb down through 58 with some pullback up to/through 58 with a pause.
21. Traders moved price almost back down to 52 fairly swiftly. Followed by some congestion (around 55) and a LH before heading back up.

I'm getting a little more comfortable when price slows a bit near an extreme area, but I'm still not at one with price when it bounces and takes off (V REV) in the opposite direction. I'm sure the only thing to help with that is more screen time.

I figured out that just because I had an area marked as an extreme, price would tell me if that area was correct or not. I was off on the high side a bit and that's ok - just need to be aware of it and adapt.

 

[fortydraws]

Gears, I hope you don't mind me making some comments and suggestions. If anything I say offends, trust that that was not my intention. If you don't want my input, send me a PM and I'll respect your wishes. Make sure you click "open" the quote panel, because I typed my suggestions in there as well.

Today was a day where I wanted to JUST focus on the extremes (PDH, PDL, 50%) area, but price didn't hang out in those areas much. A bit of a range formed in the overnight so I was mostly looking at 4464, 4458 and 4452 when the NY bell rang. I'm not sure if I should "turn off" the running commentary when price is sort of in no-man's land… Sometimes price moves very quickly through there to something else and if I'm not paying attention, I will likely miss it.

There is nothing wrong with following along in no man's land - but you need to note what matters, and you are noting so much that is not particularly useful, that one might therefore conclude that you have not yet nailed down what is most salient to making trading decisions.

___________________________________________________________________________

I'm getting a little more comfortable when price slows a bit near an extreme area, but I'm still not at one with price when it bounces and takes off (V REV) in the opposite direction. I'm sure the only thing to help with that is more screen time.

From your notes, most of your difficulties are, imo, from one main oversight: You are not tuned into really following price and seeing the higher lows/lower highs as they are occurring. Don't expend so much energy trying to analyze price action in the middle of nowhere (unless price is hinging) that you have no attention left for when it matters most. Focus on the Upper limit of the previous 24 hours and the lower limit of the previous 24 hours and the half way between them - that is it. Ignore everything else for now. Please. Just a week or so should do it.

I figured out that just because I had an area marked as an extreme, price would tell me if that area was correct or not. I was off on the high side a bit and that's ok - just need to be aware of it and adapt.

You were not off - you marked the high of the immediately preceding 24 hours. What you missed was the lower high that printed jst before the prior globex "close" - and the fact that it happened then is irrelevant - what is not irrelevant is the lower high - the fact that the market stopped precisely at that lower high after the NYC open shows the market did not think it irrelevant.

Gears, imo you need to put that one minute chart away for most of the day. You need to use a 60 minute chart, and you need to focus like a laser beam on higher lows at support, and lower highs at resistance. Only then, if then, should you switch to a shorter bar interval. That is the only signal you need to build a trading plan - whether reversals, breakouts, retraces. We can work on the details later. But for now, the only thing that can fix you is to learn to see what, imo, are absolutely the foundational price behaviors - you need to see and recognize a lower high as it is happening, and a higher low as it is happening.

If you have replay, I think you might find it beneficial to replay from the failure at 62.75 through the 46.50 low and follow that through about 9:52 EST or so. I'd like to see your commentary, if you don't mind, and I'd like to see it focus on whether or not price prints and higher low - when does it do so, and where does it do it. I've read much of your journal the last couple of days, and imo, this is where you're coming up short. IMO, you are not fully appreciating S/R and the lower high/higher low. I also get the feeling that your use of ideas such as "lonely buyers" and lonely sellers" is helping mask what is really going on from you.

My feeling is that you are so close, but that you will remain precisely and perpetually that far from where you want to be unless you change your focus to higher lows and lower highs at S/R.

Here is a 60 minute NQ chart with some notes for you to look at. Even though bar intervals are irrelevant and price is continuous, the OHLC does give us information not only to where price was and what it did there, but by taking advantage of the Open tick and close tick, it can give you an idea of the sequence, even in hindsight (this is not infallible, but it is accurate enough to use as a tool). Start at yesterday's globex high around 5PM EST, and study the next three bars - try to recreate the flow in you mind. You'll know you did it right because you'll immediately go, ""Ahhhhhh ...I get it!"

 

[gears]

40D - thanks for your comments. No need to worry about mincing words. I'm not hanging out doing this work and hoping that people WON'T comment. If I could benefit from looking at a different timeframe and seeing the things pointed out below (and trade accordingly), I can only get better.

You're right that I'm not seeing LHs and HLs as they happen - I usually see them a few minutes later and then as you've said, the trade is gone. I think I've been trying to be patient for so long with pullbacks and sideways movement, that now that I need to see something quickly, I don't.

I will take the next week and watch price at the HIGH, LOW and 50% area. I won't comment until price gets to those points in order to be as focused as is needed to really see what's happening. I will also work through (in replay) the area suggested and provide my commentary for your review.

Thank you for your comments and I'll look forward to more. I do NOT want to keep spinning my wheels and appreciate the time you took to reply.

 

[fortydraws]

I will take the next week and watch price at the HIGH, LOW and 50% area. I won't comment until price gets to those points in order to be as focused as is needed to really see what's happening.

At some point price will breakout from this range, so you should also identify some levels outside of the current range so you don't feel lost when it does.

Price is a never ending yarn being spun, not a bar. It is liquid so it flows. Always start your eyes at the left of the chart and trace it to the right.

Here is an exercise: Pull up a daily OHLC of the NDX and start at the opening tick of 1/28. Now use your eyes to trace the path price took from the 1/28 open through the 2/27 close. You must account for the whole of each bar. You will not always be able to tell whether the high or low was made first, but you will be surprised by how often you will get it right so long as you keep in mind the logic of the OHLC.

Trace every tick of each bar. The O tick is the door through which prices passes into one day and the C tick passes you to the next day's O tick. But you are tracing the flow of price not tracing bars. Imagine you are pulling a long piece of continuous thread through the bars - the thread will sometimes double back on itself, as it must to account for the whole of the activity. And don't stop - to make an observation - just go straight through without stopping.

You can repeat this exercise using any bar interval on the NDX or NQ or stock component of the Nasdaq 100 and start from anytime you wish, so you will never run out of new exercises.

 

[dbphoenix]

If this is a serious issue for somebody, he can also plot a "line on close" in a separate pane or a separate chart. And/or plot a 1p MA of the average of the H and L of each bar.

 

[fortydraws]

To clarify, the reason I think you should watch the 60 minute bar interval is that it will expand you view while focusing your attention on what is most relevant. When price trades into these levels, a shorter bar interval might make it easier for you to follow the tick.

 

[gears]

If you have replay, I think you might find it beneficial to replay from the failure at 62.75 through the 46.50 low and follow that through about 9:52 EST or so. I'd like to see your commentary, if you don't mind, and I'd like to see it focus on whether or not price prints and higher low - when does it do so, and where does it do it.

Per the suggestion of 40D, I went through the open of Friday's activity and described bar-by-bar what I was seeing. I know this is scintillating stuff, so those who don't have the attention span to read, I won't be offended!

0930
opens and heads up and then quickly retreated to 58. HH than previous bar, but closed quite a bit lower than the open.
0931
didn’t even see price - it just opened well below the previous close but then it headed back up, but didn’t close at the very high end of the bar
0932
price opens and heads up - surpasses previous high but it doesn’t stay there - keeps bouncing back but the low is in the upper area of 0931
0933
initially couldn’t get to the H of the previous bar and price was comfortable in a 1-point range until it popped up for a HH. Even though a HH was achieved, price closed lower than it had opened and it opened in the lower end of the bar.
0934
price opened and got about halfway up of the previous bar, but kept seeming to want to be lower - not pushing up until the latter portion. Price contained within the range of the previous bar for the entire minute and then popped up, but couldn’t make a HH
0935
price opened, went higher (same high as previous bar) and then went lower than the open. Pushed up higher than 0933 and then back into the price range of the previous 3 bars. Price spent most of the time in the middle
0936
price opened and fell - lower than the 0935 bar. Rebounded some, but spent much of the time in the lower area.
0937
opened and went up, but immediately went down. LL than the prior 4 minutes and stayed mostly in the lower portion of the price bar. Almost closed as a doji.
0938
like 0937, it opened, went up a little and then went down, but started to turn back up and made some strides - made a HH at 62.75 and almost held there prior to closing lower.
0939
opened and immediately dropped. Slight pops back up, but most movement was just down. Open was at the high of the bar and the close was at the bottom of the bar - definitively failure mode!
0940
opened and immediately popped up, but then retraced almost all the way to the low. Couldn’t make a HH and did make a LL than 0940 which was already in a down fashion
0941
opened and went up one tick and then headed down. Price movement was initially just a two tick range - and then it just fell - lowest low since 0931 and outside the range of the previous 8 minutes of price movement.
0942
opened and fell even more dramatically. High of the bar was the open. Some retracing, but nowhere near the price of most of the prior minute - virtually no overlap between 0941 and 0942. Closed near the bottom.
0943
opened low and started to retrace much of what occurred during 0942. But then price dropped again - very quickly and a new low was established.
0944
price opened and hung out for a few seconds going up and down a tick. Then price fell for a new low and then retreated. Not as much of a retrace as the first half of 0943, but a slight retrace.
0945
price opened and went up a bit, but initially stayed contained within the shadow of the 0945 bar. Traders initially seemed to want to go higher, but the previous high wasn’t eclipsed. Then price headed south again and made a new low - down to 48
0946
price opened at 48 and headed up a little bit, but 48 seemed like a barrier of sorts and price seemed to pause quite a bit at 49. Price stayed within the shadow of 0945 - not a HH or LL
0947
price opened and went up a little and then headed south. 48 again seemed like a barrier, but then price popped down to 46 and some change. Immediately came back up to 48 and then closed toward the high
0948
price opened and headed up. The highest price printed in the last few minutes. Then it headed south and was halted by 48. Price closed high. HH and LH than previous bar.
0949
price opened and went lower, but the movement wasn’t substantial - just within a few ticks. Then it would head south, but seem to pop up. The high of the 0948 bar was met , but not exceeded. Another HL.
0950
price opened and went south. Again, the initial movement wasn’t substantial, but the low was higher than the previous 3 bars. Price moved up, but would get back into the range of the prior 2 bars. Then price definitely moved up and out of the range of the prior 4 bars.
0951
price opened, and headed down, but didn’t get into the price range where it had been in the prior 4 minutes. Contained within the 0950 bar until the final 10 seconds.
0952
price opened and went one tick down and then went up. 5th consecutive minute where the low of price is higher than the previous minute.
0953
price opened, went up, then down and made a LL - surpassing the previous two minutes, but just as quickly rebounded and headed back up to make a HH. Price did close to the south.
0954
price hanging out within a point initially after opening and going down. A LL was printed compared to 0953.
0955
price opened and went up. A HH than the previous bar and price seems poised to go higher than 0953 - the most recent high. Dropped back down prior to the close.
0956
price opens and pops up to the high of the 0955 bar and then moves higher. Open of the bar is the low of the bar.
0957
price opened and immediately went lower, but then retraced and ended up closing at the open.
0958
started out with traders just pausing. Then they decided to move price up, met the high of the 0956 bar and exceeded it easily.
0959
price opened and retreated a tiny bit and then it started to climb a little. HH than 0958 and prices keep marching higher



Please keep in mind that I know that price doesn't "close" per se. It's just a way for me to make comparisons between price movement within the one-minute timeframe.

 

[gears]

Watching price this morning around levels of S/R. First level (4458 - ON high) was reached pretty early in the day. Play by play of what I saw:

0939
Failure mode initially. Opened and went lower. Only achieved same high as 0938 bar. Ended up meeting the HH of the 0936 bar though. Closed low, but not lower than any of the previous few bars
0940
opened low and rose to achieve a HH. Hit 3358 like a ceiling.
0941
opened and immediately went down. Paused a bit and initially stayed within the shadow of the 0940 bar
0942
opened in the middle of the 0941 bar and headed down. Didn’t breach the low of the 0940 bar and started to head back up, but then headed down and di breach the 0940 low
0943
opened and hung out in a 2tick range for 15 seconds. The made a push up a little but couldn’t get higher than the 0942 bar.
0944
opened and went lower getting lower than in the previous 6 minutes and then a big push up - closed up.
0945
opened low and pushed up and through 4458 like a knife - easily and kept going almost to 62
0946
opened low and closed high - hung out in a smallish range, but did exceed the high of 0945
0947
opened high and closed low - couldn’t breach the high of 0946, but did not go lower
0948
opposite open and close pattern of 0947, but couldn’t breach the high of 0946/47 but had a HL
0949
broke through R (62.75) and then just kind of hung out.
0950
opened and went higher exceeding the previous high. Retraced some back toward 62.75, but stayed above it initially.
0951
opened low and went up - new HH. More price movement than the prior minute
0952
opened low and went up, but not much direction. Seemed to favor the downside of the price range, but a LL did not occur
0953
price movement has slowed down substantially. No HHs or HLs.
0954
opened and went up making a new HH, but then price went lower but not to the low from the previous 2 minutes
0955
opened and popped up - definitive new HH with much broader range of movement.
0956
opened and went up a tick and down a tick, but price mostly just hung out.
0957
started out like 0956 - not much movement. Low is still higher than 0956 and open is low with close high
0958
initially repeat of the previous two bars, but with price inching up. Confirmed high of 0955 and exceeded it by a tick, but movement has slowed down again until the last few seconds. Closed at the high
0959
opened high and went lower, but did not make a LL
1000
price opened and went higher - new HH. Some retracing, but up is still the mode


Stopped at that point with the bar-by-bar commentary as price had moved quite a bit away from even the 2nd area of resistance I had identified (4462.75 PDH).

It was interesting to each that when price broke the DL, it bounced off the 50% level twice (1049 and 1105) before resuming its trek back up (red arrows).

On the 60min chart, the bounce off the hinge level was definitely eye opening.

 

[gears]

This morning life interfered with my ability to watch price as long as I wanted to. So I did a replay session - using a 5min timeframe. It was interesting to do so - both positive and negative outcomes.

On one hand, it forced me to be patient and just watch the right tick. It also condensed the information so I could concentrate on larger pieces of data at once rather than feeling like everything was a special nuance.

However, if a DB or DT were to occur, I wouldn't necessarily see it because it wasn't explicitly printed in front of me. However, when 3 or 4 5min price bars all have a low at around the same area, that can be telling.

I won't bore everyone with the play-by-play, but it was a good session.