Reading 'Master The Markets' - Confused

[rcctradings]

Hi Tech/a
I'd say there is still supply at 6 and the test is going to fail and consolidation will continue.
The last 4 price bars have been closing lower, and the volumes are around average, would that indicate supply is overcoming demand?
Rigo

 

[beachlife]

Guppy has demonstrated it as has Beachlife. (Their belief is that the masses
are being fooled by volume

Didnt say that. He just said that decades ago volume was a good indicator of what the 'informed' traders were doing, but with todays access to information, that logic no longer applies. But I think he was talking about volume levels when a break out occurs, whereas you seem to be talking about volume during consolidation as well.

The reason I posted about the video was to make the OP consider whether or not a book written a long time ago was still relevant today. I havent read it so cant comment.

 

[tech/a]

The reason I posted about the video was to make the OP consider whether or not a book written a long time ago was still relevant today. I havent read it so cant comment.

Yet you did?
How can you consider relevancy let alone the OP?
You've not read it but seem compelled to issue a warning!

I'm sure Guppy hasn't read it either.
Let alone tried to apply it!

 

[beachlife]

No I didnt comment. The OP asked a lot of questions in his first 2 posts and you werent answering them. You just added to the questions and promised to reveal all and help him discover the answers but only if he did his homework. I thought that sucked so I just pointed him in the direction of a well respected trader who happens to have a view on volume that makes perfect sense to me and a very simple approach to trading that works.

But he has now had a crack at reading your chart and has given a very clear answer so hopefully you will help him now.

 

[tech/a]

In my opinion if someon has a question particularly on which is that they

DONT UNDERSTAND

There is no point in just supplying an answer. Generally those that do understand can
See why it is that those that cant ---- can't,
Hence the questions I pose to those who need to find the answers.

Then leading people through case studies in my experience gets them
Asking the questions THEY NEED TO ASK
To apply the analysis.

The end result often removes the mystery of APPLICATION
The prime question asked directly or indirectly by most posters.

Flat out this morning so in the absence of any more direct comment on the two charts
Will sum up tonight.

 

[Wysiwyg]

So using your knowledge now of volume and price---what is likely in either chart??---ANYONE

Am reading Anna Coulling's guide to VPA at present. So my interpretation of bar (6) is that buyers have had enough of the supply coming in at resistance. With the bar before bar (6), Anna says that there is an anomaly if the bar range doesn't match the higher volume (Wyckoff - cause/effect) so it means that bar before (6) on above average volume and narrower range was more supply pushing the price lower. Then bar (6) shows lower volume and a lower close validating the observation. The price will now move lower and possibly shake out all the remaining supply.

Now I am a novice with this stuff so that is my saving grace and zero embarrassment if I am completely wrong.

 

[Lone Wolf]

View attachment 58350

So using your knowledge now of volume and price---what is likely in either chart??---ANYONE

I don’t have much time right now but I don’t want you to think nobody is interested.

I find consolidations confusing. When you come out of a trend you can clearly see who has control. You’re waiting for those in control to lose interest or for the other side to take control. In a consolidation neither side is in control, so I find it hard to tell if low volume is due to lack of supply or lack of demand. In truth it’s actually both.

You could look at the high volume at the lows and say that supply is failing to overcome demand and that it is being accumulated. But the very low volume at the high (5) says that that it takes no effort to push price down. At (6), price has drifted back to the lows, the closes of the recent 4 bars have been near the lows. It looks weak. The effort to hold price up isn’t resulting in movement.

However, the low at (6) Is relatively low volume compared to the other lows. Is this a low volume test of the lows that often results in a bullish movement. Has demand been exhausted? or has supply withdrawn? As I said – Confused.

 

[tech/a]

OK and WOW

Well done everyone for having a go.
To summarize everyone.

RCC
Test to fail Supply over coming demand

WYSI
Push lower shaking out supply.

Lone W and The Kid
Holds the argument for weakness but not the confidence in what he sees.

Farmir
Just having a little trouble getting his head around it all.

I must disagree that volume is needed in EVERY case for a break out of consolidation
Often the best breakouts don't have volume!
On the Short Side Supply just keeps looking for buyers at lower and lower prices buyers are swamped by supply.
and on the Long Side buyers keeps looking for sellers at higher and higher prices as Sellers withdraw.

After this little exercise Id say that the majority of people can "see" what a chart can tell once they actually know what to look for.

WELL DONE seems I haven't wasted my time!

CLICK TO EXPAND



So Finally what is the SECOND CHART SAYING?

 

[rcctradings]

Flat out this morning so in the absence of any more direct comment on the two charts
Will sum up tonight.

Well. I've given my take above. So did a couple of other posters.
We are still interested in the topic and I believe that exercises are indeed more instructive than simply straight answers. I'm here to learn, not to be fed.

Thank you for all your guidance so far.
Sorry, just saw your last post.
Rigo

 

[Wysiwyg]

With the bar before bar (6), Anna says that there is an anomaly if the bar range doesn't match the higher volume (Wyckoff - cause/effect)

I got my law mixed up there because I was referring to the single bar and not the overall pattern. It should have been (Wyckoff - Effort vs. Result).

 

[Lone Wolf]

So Finally what is the SECOND CHART SAYING?

This second one - High volume at the lows showing possible accumulation. A recent mini trend within the channel with higher lows and higher highs. The recent high volume bar wasn't actually at the high, but when it pulled back from the high. This was followed by tight consolidation rather than continued selling. If I had to pick one, I'd go long. But once again, it would've been better to go long above support than long below resistance.

I don't know if this matters, but the previous up trend didn't seem to end due to any climactic action, but rather seemed to end due to a general lack of buying interest at the highs. If so, we might have more success now that some holders were shaken out during this consolidation period.

Quoted my earlier post for honestly. But I don't know anymore.

Looking at the last few bars. Two bars reaching up to the highs and closing on their lows on average volume. Then a bar that gaps down, closing on its lows on very high volume. Looks like sellers stepped in. However, that's where it ended. The next few bars have failed to push lower. The second last bar was a very low volume up bar.

I believe it comes down to what you think the last very high volume bar means, as that changes the context for the very low volume up bar.

If the high vol bar was demand absorbing the supply that came in, the low vol up bar indicates no supply. Up move expected.

If the high vol bar was supply holding down demand, then the low vol bar indicates a lack of effort to overcome supply. Down we go.

I feel the overall pattern has accumulation, the recent move was up, the recent pullback is shallow and hasn't dragged on for too long yet. So unless the recent low is taken out I'll stay on the long side.

 

[Faramir]

My answer was wrong in Post 23. I honestly did not expect a big drop in price after '6' as shown in Post 48. I originally thought good volumes represent good buyers. Post 40 changed but made me wondering which way the next bar will go. This quote challenged my thinking.

The belief of the masses is that High Volume is Great and very positive
and Minimal Volume is Weak and negative.

I believe the EXACT OPPOSITE (In context of the chart being read ).
This is the Hard part it seems counter intuitive.

Thank you tech/a. I tried my best to answer your question. I keep re-reading this post again and again. Forgive me but I am only new at this. One day I too will join the majority who can see what the chart is telling.

 

[luutzu]

Right after the battle of Waterloo, 1815 [?], Nathan [?] Rothschild got the news from his agent near the battlefield that Napoleon had lost the war. No one else in England had heard of the news yet.

So Rothschild began selling everything on the market... soon, words got around that he's selling and the people there knew that if Rothschild is selling, it must mean that he knew Napoleon had won and soon England will be a French colony so they all sell too and within a couple of hours, everything was crashing.

Now, imagine if these prices and these volumes are on a chart, you too will sell... and imagine if you are that Rothschild who started the panic BUT then forget that you started it and follow the charts, you too will sell.

Rothschild knew the source and start to buy and thereby pretty permanently established the Rothschilds empire.


I think you guys might have missed the fact that maybe what you're doing is also reflected on the price chart. So to then make decision based on previous decisions that were based previous decisions that were made in the same way - chart reading... doesn't make sense.

You are reinforcing your own thinking - until a few experienced among you jump a step or two ahead; or until other events, like actual profit reports showing great losses or profits than expected pushed the reset button...

But i suppose you guys are thinking most of the transactions were made by fundamentalists, fund managers and tea leaf readers so your transactions are negligible.

That too is speculation.

 

[payday]

Right after the battle of Waterloo, 1815 [?], Nathan [?] Rothschild got the news from his agent near the battlefield that Napoleon had lost the war. No one else in England had heard of the news yet.

So Rothschild began selling everything on the market... soon, words got around that he's selling and the people there knew that if Rothschild is selling, it must mean that he knew Napoleon had won and soon England will be a French colony so they all sell too and within a couple of hours, everything was crashing.

This is an entirely incorrect urban myth that has been used (and obviously) continues to be used to this day to discredit the Rothschilds. This myth was especially perpetuated by the Nazis - Joseph Goebbels in 1940 approved the publication of the book Die Rothschilds which reports on this legend. The truth is that, according to Niall Ferguson in his book "The Ascent of Money", the Rothschilds were nearly ruined by Wellington's victory, and I quote from page 82 "Their fortune was made not because of Waterloo, but despite it.

 

[beachlife]

Did anyone say go short at the close of bar 6?
Did anyone say go short at the next day open?
When exactly is the decision to actually place the trade made?
Where is the entry, where is the stop, where is the exit?
What happend next 10 days?
How much money was made?

 

[tech/a]

Some terrific responses.

I think you guys might have missed the fact that maybe what you're doing is also reflected on the price chart. So to then make decision based on previous decisions that were based previous decisions that were made in the same way - chart reading... doesn't make sense.

Yes you are absolutely correct---All charts have a left of page and that supplies a history of participant behavior.
The right of page is what is happening BAR by BAR----every bars volume and range is important in the context of reading a chart. It may not make sense to you but to some of us it makes perfect sense.

You are reinforcing your own thinking - until a few experienced among you jump a step or two ahead; or until other events, like actual profit reports showing great losses or profits than expected pushed the reset button..

.

The Participants on a bar to bar basis REINFORCE MY thinking or ALTER IT. How the participant come to their trading decisions doesn't concern me.

But i suppose you guys are thinking most of the transactions were made by fundamentalists, fund managers and tea leaf readers so your transactions are negligible.

That too is speculation.

I can only speak for myself---I have no idea who the participants are (But do from time to time have my suspicions) it doesn't matter----speculation---from your seat that's the way you see it---from mine its a part of my discretionary trading method. The rest is minimization of risk and maximization of Profit---another topic.

B/L your questions I'm sure are on the tips of many tongues---thanks.

Did anyone say go short at the close of bar 6?

It was a resounding 90% 4 of 5 who at the last bar read weakness. I'm sure the break below would have seen the confirmation they needed. But again this was and still is an exercise in chart reading----I'm even more certain the would not have gone LONG!

Did anyone say go short at the next day open?

See above.

When exactly is the decision to actually place the trade made?

This Chart is how I would have traded the consolidation and breakout---how anyone else would have traded it I don't know.

Where is the entry, where is the stop, where is the exit?

All here

Click to expand.

What happend next 10 days?

This did

Click to expand

How much money was made?

Depends on where the last trade is closed.
Do you think I would have closed it yet?
Do you think Id have a trailing stop?
Do you think Id have closed some of the position or all?

There are many many options---how much is made is really trader based---point is though its a PROFIT!

Any more ideas on Chart 2?

 

[kid hustlr]

Ripper analysis tech/a.

Perhaps more impressive that your analysis is your patience.

A couple of quick things, recognising everything is easier in hindsight:

1. The more I look @ the chart the high supply bar (@ the bar you mark 1) to me seems very important. Initially as you said it retraces off the lows on low volume - there's nothing doing. Then it comes up for another look. THIS TIME THERE IS VOLUME AND THE NEXT DAY IT GETS TURNED AROUND FAST. To me that's the sign we should be looking for shorts (SUPPLY IS STILL PRESENT) and until that bar is breached the short side is the strong side. Any upthrust/weak test/etc are chances to get short.

2. After the breakdown, the overall bounce/consolidation period is weak. If this had retraced back a long way then my view would change but as played it simply looks like a pause in the momentum to the downside, rather than a strong accumulation and possible turning point.

3. Other factors such as long term support/resistance/context and the parent index are also important.

4. From a trading perspective, I think compounding/pyramiding and trusting your analysis is huge as when you are right you NEED TO BE AGGRESIVE

I know for me personally sometimes I look @ the volume @ the low and think 'OK ITS TURNING' when quite often its just a pause before continuing. This is where things like the level of the retracement, the volume at the extremes, the parent index, longer term context all play such an important role.

 

[beachlife]

Some terrific responses.



It was a resounding 90% 4 of 5 who at the last bar read weakness. I'm sure the break below would have seen the confirmation they needed. But again this was and still is an exercise in chart reading----I'm even more certain the would not have gone LONG!




Any more ideas on Chart 2?

Reading weakness is one thing but at the end of the analysis a decision to trade or not has to be made, and if you miss the move then all that lead up work was a waste of time. If you wait for the price to break the consolidaion, then that seems to be a price based entry. I assume the point of VSA is to get an edge over price only methods, ie an earlier entry, so what in VSA said take the earlier long and short entries in consolidation?

The longs in consolidation were wrong, no problem with that, every system has losses, but what is the win/loss ratio of VSA?

Trailing stops are usually price based. Where does VSA signal the exit?

What is the chart? I want to see what my criteria would have said.

 

[tech/a]

Reading weakness is one thing but at the end of the analysis a decision to trade or not has to be made, and if you miss the move then all that lead up work was a waste of time. If you wait for the price to break the consolidaion, then that seems to be a price based entry. I assume the point of VSA is to get an edge over price only methods, ie an earlier entry, so what in VSA said take the earlier long and short entries in consolidation?

The longs in consolidation were wrong, no problem with that, every system has losses, but what is the win/loss ratio of VSA?

Trailing stops are usually price based. Where does VSA signal the exit?

What is the chart? I want to see what my criteria would have said.

B/L

I may have this wrong but

I was under the impression you are a reasonably experienced proponent of T/A.
The questions that keep coming up are either ones of a novice or your taking the Micky for the sake of argument.

If you really are totally clueless than I'm happy to spell it out.
Let me know which it is.

 

[beachlife]

B/L

I may have this wrong but

I was under the impression you are a reasonably experienced proponent of T/A.
The questions that keep coming up are either ones of a novice or your taking the Micky for the sake of argument.

If you really are totally clueless than I'm happy to spell it out.
Let me know which it is.

When it comes to VSA, clueless and curious.