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The S&P Chronicles - An Amalgamation of Wyckoff, VSA and Price Action
Just finished reading all of your posts. Great commentary! A clear view through someone else's lens is a wonderful way to expand your own view of the market. Thanks!
The DOM can be a very useful tool in this instance as it will reveal exactly whats going on. Specifically looking at individual bid or ask traded volume. If you are quick enough you can very accurately pick the turns. Used in conjunction with VSA on smaller time frames it can be a powerful combination.
I have a question about one of the chart in your last chronicle...
See the circle in Red:
Price pulled back and you identify it as AR (Automatic rally). I thought a rally was when price was going up. Why is it considered a rally when in reality it is just a small pull back? Also, at which point were you able to identify it as an AR? Is it when it broke below it many bars later? My point is how useful is this info in your decision making specially when you can't tell if price will keep going up or not at this point in time?
Good question - I'm sure many are thinking are the same. This is literally how Wyckoff would describe distribution from the early 1900's and uses the term ''automatic rally'' for both phases (Accumulation and Distribution)
The thinking behind this, if I remember correctly is that when the market has a buying or selling climax, its very nature is extremely aggressive chunking at price with large orders, this action creates a vacuum within the market - hence the automatic rally, (an imbalance between demand and supply)
The AR phase we do not concern ourselves with, it's the process of distribution/accumulation which is key, they all have a slight variation and some are easier to read than others. Usually around the secondary tests our ears perk up, it depends on ones chart reading skills and the ability to identify (accumulation/distribution)
Hands down the safest, best trades from the Wyckoff playbook is the rally back to ice or the back up to the edge of creek, (80% of my swing trading portfolio), when we have an aberration like the huge swell in volume back to ice, we simply back off.
Saying that if we recognise accumulation or distribution on a higher time frame (daily), we can take advantage of the phases and trade intraday. We know specific targets and levels in advance which helps the trading process.
