Trouble interpreting price/volume/support/resistance
- Thread starter abxs
- Start date
Magna
Administrator
As he's been mentioned a few times in this discussion here's links to the main dbphoenix threads on ET:
Price and Volume
Price and Volume: Strategy
My Stuff (Compilation of many/most of his ideas)
Price and Volume
Price and Volume: Strategy
My Stuff (Compilation of many/most of his ideas)
There are many different methodologies involving s/r analysis or supply/demand analysis.
The dbphoenix info you've already read, interpreted and used is not a method nor a complete trading plan.
It's a solid basic foundation that explains supply/demand and its up to you to mode it into a method that suits your trading style.
Thus, your comment that somehow it won't work when I try my hand at it may have something to do how your interpreting what he said.
Also, not really explained in dbphoenix info, if your going to use s/r analysis or supply/demand analysis as the reason to enter a trade...
You should also use it for exiting a trade.
Something else, when using s/r info...try to approach your analysis via zones instead of via lines because its compatible with what's said below.
In addition, your trading seems to be attracted to price patterns involving Hammers based upon the entries or questions you've annotated on every chart you've posted in this thread eventhough you never mentioned the word Hammer.
EliteTrader.com has two decent threads on Hammer patterns and the price action that leads into a hammer pattern that will compliment well any info about supply/demand because Hammers are part of the Long Shadow Family...
Types of candlesticks that represents changes or shifts in supply/demand based upon current price action.
Further, look up all the information you can find here at ET about WRBs (wide range bodies or wide range bars).
Trying to learn and apply supply/demand analysis without understanding the impact of WRBs is a difficult task...a task most can't do profitably.
Just like Hammers...WRBs represents changes (shifts) in supply/demand.
More importantly, WRBs will give you a visual image of volatility in all that volume analysis your currently doing.
Trying to understand volume without understanding volatility can lead to a lot of misinterpretations about volume analysis.
Simply, read dbphoenix info again...slowly this time because its the type of information that takes months to develope into something you can begin calling a trading plan.
Once you begin to understand what he's explaining...then start to get into the advance stuff involving WRBs and Hammers especially since every one of your chart examples you posted so far involves WRBs and Hammers concerning the price action of your entries or question marks about a particular price action area on your chart even though you may not know what a Hammer or WRB is.
Good luck and hopefully more of us ET members that uses methods involving supply/demand will post additional insights in your thread.
Mark
No offense to anybody, but the threads mentioned above are essentially an introduction to the subject. But beyond that, trading S/R and the shifts between buying pressure and selling pressure -- or "supply and demand" -- is not a "method" but rather an acknowledgement of how markets work.
In your first charts, for example, you begin by misplacing S/R, which is at 5655. Even so, you could make some successful trades here, but you also seem to misunderstand the nature of trend (which I hesitate to get into given the various flamefests which have occurred here on this subject). Because of that, you're shorting uptrends and buying downtrends. This is at best a recipe for failure.
As for the volume, you say first that "rising volume on down bars, keep reaching lower", but say nothing about what that means to you. Note also that while the bars "reach lower", they close well off the lows. If selling pressure were enough greater than buying pressure to get you into trouble, the volume would be higher and the bars would be closing nearer or at their lows. The fact that none of this is taking place is a sign of strength, not weakness. Your comment "lower volume and bars go nowhere sign of weakness not" is a sign more of impatience than anything else. What matters is that price isn't falling.
As for the short, why? You're in an uptrend. You haven't had a double top or even a lower high, much less a reversal. By the time you go long, you've had one lower high, broken the uptrend, fallen below the last swing low, and had a second lower high.
Sorry to appear negative, but you really need someone who knows what he's talking about to take you by the hand and start over with you. Whether or not you want to take advantage of the resources available to you is your decision. But trying to figure all of this out on your own may take a very long time. Once you've learned how to plot S/R, you then have to decide whether you're going to trade breakouts, retracements, or reversals. You're going to have to learn how to detect trend. You're going to have to learn how to determine whether the imbalances between buying pressure and selling pressure are enough to threaten your trade. It's next to impossible to cover all of this in a few posts, much less a thread.
Therefore, I suggest you stop where you are. You got off track somewhere. Maybe you need no more than a little adjustment. But you may also have misunderstood basic principles. Either way, the last thing you should be doing is throwing money into the market fire while at the same time trying to figure all of this out.
In your first charts, for example, you begin by misplacing S/R, which is at 5655. Even so, you could make some successful trades here, but you also seem to misunderstand the nature of trend (which I hesitate to get into given the various flamefests which have occurred here on this subject). Because of that, you're shorting uptrends and buying downtrends. This is at best a recipe for failure.
As for the volume, you say first that "rising volume on down bars, keep reaching lower", but say nothing about what that means to you. Note also that while the bars "reach lower", they close well off the lows. If selling pressure were enough greater than buying pressure to get you into trouble, the volume would be higher and the bars would be closing nearer or at their lows. The fact that none of this is taking place is a sign of strength, not weakness. Your comment "lower volume and bars go nowhere sign of weakness not" is a sign more of impatience than anything else. What matters is that price isn't falling.
As for the short, why? You're in an uptrend. You haven't had a double top or even a lower high, much less a reversal. By the time you go long, you've had one lower high, broken the uptrend, fallen below the last swing low, and had a second lower high.
Sorry to appear negative, but you really need someone who knows what he's talking about to take you by the hand and start over with you. Whether or not you want to take advantage of the resources available to you is your decision. But trying to figure all of this out on your own may take a very long time. Once you've learned how to plot S/R, you then have to decide whether you're going to trade breakouts, retracements, or reversals. You're going to have to learn how to detect trend. You're going to have to learn how to determine whether the imbalances between buying pressure and selling pressure are enough to threaten your trade. It's next to impossible to cover all of this in a few posts, much less a thread.
Therefore, I suggest you stop where you are. You got off track somewhere. Maybe you need no more than a little adjustment. But you may also have misunderstood basic principles. Either way, the last thing you should be doing is throwing money into the market fire while at the same time trying to figure all of this out.
Likely my last post in this thread. Just answering some queries that abxs asked me.
First, what the many posters have mentioned here are useful. Yes, there's a lot more to it then what have been suggested so far as what Lamont_C has said. But the guy has to start from somewhere and yes he should stop live trading now. I can certainly said he knows much more than me when I started off after a few months.
Ok, an answer to your query as there are many other posters and threads here that are much much better than me.
I use much more than technical analysis to identify trades. I will map out support/resistance lines, identify which are more important, see how price and volume reacts throughout the day, buying and selling pressure, see how the futures and indices are behaving, news effect etc. I also use moving averages and Fibonacci Resistance, tape etc.
Quote :
"Quote from billp:
Other charts
You ask questions as to why target profit is not achieved or why the direction you are hoping for did not materialise.
Answer: There is resistance/support overhead. For eg in your last chart, there was a previous support that turned out to be the resistance. That's why your target was not achieved
Hope this helps
--------------------------------------------------------------------------------
This I find not really a very good argument, as I can give you examples where it does form a W-bottom or a double/triple bottom and than rallies up... I'm trying to find the key to identifying on which points it might go up hard and on which points it might fade up and then move further down... what kind of tools do you use (eg I don't use indicators)..."
reply:
You can draw the support/resistance beforehand. Will this hold? To have a better feel whether this support/resistance will hold, you will need to see how price reacts around this level, the buying/selling pressure, volume, what the futures market is doing etc. So the more correct answer is you will have to see what is happening in the market at that current moment to better gauge whether that support/resistance will hold. How will you know what to look at. Answer:--everyday, just keep staring at your screen. Also, read the threads/books which you think will help you understand what the market is telling you. Guess this is not the answer you are expecting but most of us do it through this way. Good luck
First, what the many posters have mentioned here are useful. Yes, there's a lot more to it then what have been suggested so far as what Lamont_C has said. But the guy has to start from somewhere and yes he should stop live trading now. I can certainly said he knows much more than me when I started off after a few months.
Ok, an answer to your query as there are many other posters and threads here that are much much better than me.
I use much more than technical analysis to identify trades. I will map out support/resistance lines, identify which are more important, see how price and volume reacts throughout the day, buying and selling pressure, see how the futures and indices are behaving, news effect etc. I also use moving averages and Fibonacci Resistance, tape etc.
Quote :
"Quote from billp:
Other charts
You ask questions as to why target profit is not achieved or why the direction you are hoping for did not materialise.
Answer: There is resistance/support overhead. For eg in your last chart, there was a previous support that turned out to be the resistance. That's why your target was not achieved
Hope this helps
--------------------------------------------------------------------------------
This I find not really a very good argument, as I can give you examples where it does form a W-bottom or a double/triple bottom and than rallies up... I'm trying to find the key to identifying on which points it might go up hard and on which points it might fade up and then move further down... what kind of tools do you use (eg I don't use indicators)..."
reply:
You can draw the support/resistance beforehand. Will this hold? To have a better feel whether this support/resistance will hold, you will need to see how price reacts around this level, the buying/selling pressure, volume, what the futures market is doing etc. So the more correct answer is you will have to see what is happening in the market at that current moment to better gauge whether that support/resistance will hold. How will you know what to look at. Answer:--everyday, just keep staring at your screen. Also, read the threads/books which you think will help you understand what the market is telling you. Guess this is not the answer you are expecting but most of us do it through this way. Good luck
I appreciate the comments, and indeed I could use someone that takes this step by step with me, because I'm all figuring it out by myself and it's not working so well... I thought I understood the basics quite well actually... what do you suggest than? I've read all dbphoenix's threads and found them very interesting...
I must admit sometimes volume confuses be, and other times volume just is the same or quite constant on very different bars which makes it next to impossible to make anything out it. Then I just leave volume out of the analysis. I only use it to support what I see in the price movement. Any other suggestions?