If I was trading that, I would have done nothing at that point. If you were holding a gun against my head, I would go long. The red bar on high volume looks like a shake-out to me with the attempt at going lower being rejected. After the next bar that looks like indecision, the market moved higher on still very high volume. Something seemed to have happened and the high volume and wide range bar looks like demand.
Of course I am 0 for 1 here, so everyone might be better off fading me.
I went and looked at Ben's puzzle again and he asks what will happen next? Correct me if I'm wrong, but I didn't read it the first time as "would you go long or short?" I don't think we have enough information yet to decide what to do. Do we?
as you can see volume has been increase and we did create a reversal candle so if you were bullish you were right
now not saying that the short was wrong you can take the short position with a tight stop
in fact i will try to short this move with very tight stop and reverse this way i will join the trend and if not i will reverse my position
Keep on sowing your seed, for you never know which will grow -- perhaps it all will.
I guess what I mean was that I would be apprehensive going short at the tend line based on the price action and the volume patterns. Because the volume was increasing on the down bar witht the bar closing well off the low it looks like "accumulation" from high volume traders. As another person suggested, the up bar that dipped down and then came all the way back up and closed on the high looks like, as they indicated, a shake out. So, based on this I would be hesitant to short. The chart you post now paints a completely different picture than the one in the puzzle. This picture gives a larger view of the market and the price action. I now see that the area in question is making a higher low. If I put these pieces together I may be thinking long before the TL break and certainly after.
Next time I'd like to see the full page screen shot like you just showed, right up to the bar in question. My mind works better this way To prevent cheating you could always just connect to Simulated Data Feed for a few hours or something if you want to really prevent cheating
Yes, having CMA on there makes it very different, at least for me it gives it a new perspective.
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I understood your request to mean analyze Fridays action and give my input for going into Sunday/Monday. I hope that is what you were asking for because that is what I did on the attached picture.
What I have done is worked up what I consider to be a possible scenario based on my bias. My bias is that CL is moving higher based on the higher developing value area and the higher time frames are in up trends. Of course anything can happen and one of the beauties about day trading is the taking advantage of intra-day trends.
It will be interesting to see what happens, but I would like to see CL move down into the balance area indicated on the chart with confluence of the 61.8 retracement. If whatever method one uses to determine if price is reversing there, a long trade with a potential initial target of the POC from friday is possible IMO. The average daily range could also be the target or the virgin POC. The problem I have with these kinds of trades is that one needs to hold through all of the oscillations of price and that can be tough to do.
FYI. I have commented on single prints on the Market Profile and corresponding low volume area that took place in the A period on Friday. The term low volume can be confusing because it shows up as low volume on the horizontal axis of the volume histogram to the right of the lettered profile. From what I have studied it takes high volume on the vertical axis to create this situation. The meaning being, it is large players entering the market pushing price higher at a rapid pace.
Ben, if you were looking for something other analysis let me know.
I added a second pic from Friday the 26th on the ES. It is an example of what I am referring to in the CL scenario.
Last edited by David_R; February 28th, 2010 at 06:39 PM.
Reason: Added ES exapmple trade from 2/26
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