Trading NQ via Price Action

[dbphoenix]

That bar where it goes up, we simply don't know at the time if it can go higher or not. Within that bar we would see price coming down, but its only when that hourly bar "closes" that we see price exit slightly lower than the price where it actually entered. Now we could say that they might try again, but we also notice that on this bar, the bar at B, price also broke lower below the previous lows. So we couldn't go higher, but we tried to go lower, and ended up in the middle of the bar but close to the bottom of that range. Its only on the next bar that we see price try lower again, but not try any higher. Then we have another bar that stays at the bottom of the range, but still doesn't break lower just yet, not below that previous low at least.

Don't complicate it. And the bar interval is irrelevant.

The "bar where it goes up, we don't know at the time if it can go higher or not".

When do you know that it can't or won't or isn't?

(And forget about closes and what's happening "in the bar". Keep it simple.)

 

[k p]

When do you know that it can't or won't or isn't?

Hmm... Well if we look to the left and see the previous high, we have this level in mind, roughly 4293. So when we match this level as price is going up, price will stall. Time continues, and it never once goes higher. So the minute we can't go higher than 4293 it becomes apparent, but this is no reason to assume it can't go higher, we can just see that it isn't, and eventually we see it coming down. On the next bar, it for sure hasn't gone higher, this we can see. We still don't know if it can go higher, maybe it will, but we see it hasn't gone higher. We can never know that it can't go higher, but we can see it hasn't gone higher, and at the time we can see it isn't going higher.

Now perhaps I'm jumping the gun here, but if we want to make money on this, as its going lower, we see that our risk to find out if it can go higher is increasing each time it goes lower because to know that its not going higher, we would have to at least wait to see what happens again at that level. So if we want to short, the best place is at the top somehow, and if we short lower down, our stop would still have to be above that high and hence the lower is goes, the bigger of a stop we need to see if we can in fact go higher.

 

[eminiman414]

If I am reading this correctly then on my five minute chart there are actually two retests of the breakout below the consolidation? Is that the area you're describing? How should I handle that second retest at 1055 cst being higher than the 1st test at 1005?

Sorry I don't have a chart in front of me I was just going by what I remember. I think there were some pretty "clean" plays within the overnight range also that day and price only came back as far as the mean before the breakdown if I remember correctly.

 

[dbphoenix]

Hmm... Well if we look to the left and see the previous high, we have this level in mind, roughly 4293. So when we match this level as price is going up, price will stall. Time continues, and it never once goes higher. So the minute we can't go higher than 4293 it becomes apparent, but this is no reason to assume it can't go higher, we can just see that it isn't, and eventually we see it coming down. On the next bar, it for sure hasn't gone higher, this we can see. We still don't know if it can go higher, maybe it will, but we see it hasn't gone higher. We can never know that it can't go higher, but we can see it hasn't gone higher, and at the time we can see it isn't going higher.

Now perhaps I'm jumping the gun here, but if we want to make money on this, as its going lower, we see that our risk to find out if it can go higher is increasing each time it goes lower because to know that its not going higher, we would have to at least wait to see what happens again at that level. So if we want to short, the best place is at the top somehow, and if we short lower down, our stop would still have to be above that high and hence the lower is goes, the bigger of a stop we need to see if we can in fact go higher.

Don't concern yourself with numbers or making money or stops or shorts. Keep it simple.

You have "A". "A" soon represents a high. This high becomes a swing high. Since it is the highest swing high during this period, it also represents an extreme. When price tests this extreme at "B" and can't beat it, what does this tell you in real time?

 

[dartmus]

Don't concern yourself with numbers or making money or stops or shorts. Keep it simple.

You have "A". "A" soon represents a high. This high becomes a swing high. Since it is the highest swing high during this period, it also represents an extreme. When price tests this extreme at "B" and can't beat it, what does this tell you in real time?

Maybe it will test the opposite xtrm.

 

[k p]

Don't concern yourself with numbers or making money or stops or shorts. Keep it simple.

You have "A". "A" soon represents a high. This high becomes a swing high. Since it is the highest swing high during this period, it also represents an extreme. When price tests this extreme at "B" and can't beat it, what does this tell you in real time?

In real time it tells me that this extreme has been tested and rejected, nobody wants to pay more.

 

[k p]

And let me also add this chart with other swing points in case we need to refer to them.

 

[dbphoenix]

Maybe it will test the opposite xtrm.

It might. But at this point, there is no opposite extreme.

 

[dbphoenix]

And let me also add this chart with other swing points in case we need to refer to them.

You're getting ahead of yourself again. None of this is available to you in real time.

In real time it tells me that this extreme has been tested and rejected, nobody wants to pay more.

For the moment.

Now, consider what you have to use once price has failed to exceed "B" (ignore everything after "B"):

With regard to your first "ranging" rectangle, what can you look for to tell you whether traders intend to go back to ranging after price has left "B" or possibly initiate a trend downwards?

 

[dartmus]

It might. But at this point, there is no opposite extreme.

It's not my intention to argue and particularly not with you given as much as I am learning from you as that would be really dumb on my part as I could instead just sit back and take it all in and still keep learning. By participating I am hoping I will learn even more.

Can we know at that point after rejecting going higher, that it's likely to test the opposite direction. The lod and perhaps even yesterdays lod? Or should I be looking at some other properties or concepts all together different from what I'm thinking about?