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The S&P Chronicles - An Amalgamation of Wyckoff, VSA and Price Action
Great trades as always! It looks so easy when you break it down in your chronicles.
I was wondering if you ever consider going short where you exited on Bar K? I'll admit I've taken trades like that a fair bit before reading your work. my batting average was not as high as yours but when I was right I could often get a big winner which I felt help make up for the many losers.
I also liked a short four bars after K which looked like a No Demand situation after what to me was a sign of weakness in the near background, ( the rejection at previous days high ) Do you think these are too aggressive, and more evidence is needed to try these shorts? What if one trades off a 1min chart, could it be justified?
Do you think it's a good practice to always demand a COB in wave volume before you would consider shorts?
Thanks again for you great analysis, you've helped me so much already with these chronicles!
Ref: Bar E, you say 'There is a huge tell about this bar - it has the lowest volume for any down bar since the open, this is significant'.
I can understand that, but I also think, it only needed a small volume to move down like that, its got a decent spread and finished on its low, ie theres not much buying pressure.
The bars around K we would classify as an upthrust, not as an individual bar perse, but with the price action.
Due to being in a long position and the market showing some strength and the lack of selling from the highs being rejected, ideally we would wait for a weak pullback to apply long plays for another leg up.
Although the highs were rejected, there was no evident sign of weakness (a classic upthrust with decent volume would be an instant sell) the sign of weakness emerged later with the ''change of behaviour'' downwave. Supply didn't emerge at the highs, it was the lack of demand and yes this could be traded, it is an aggressive play but valid, depends on ones risk appetite, and of course the couple of bars later illustrate the lack of demand, but contextually for myself, it wasn't clean cut enough.
Excellent observations; with this methodology many expert Wyckoffian traders will trade the same principles/setups with completely different entry and exit points; many factors to include are the individuals chart reading ability, account size, and psychological makeup etc
There are many excellent Wyckoffian traders that use 30 sec charts to enter trades; from a personal viewpoint the smaller timeframes require too much attention and energy, it takes a lot of effort to maintain that degree of concentration for 8 hours (across multiple instruments, is virtually impossible) - the 5m chart is perfect for my style and ''concentration energy''
A change of behaviour are excellent premises for reversal trades, as always, trades are completely contextual, a decent picture perfect upthrust in an uptrend with the right background conditions are grounds for a short play, a sign of weakness in its own right
I completely understand your thought process. It helps to remember that the market has had a change of behaviour in wave structure (for 5m timeframe) up waves are now larger than the down waves, and if we dissect the wave into individuals bar, we get excellent confirmation via C (breaks resistance with a firm close and good volume)
Buyers have now proved themselves and in control, its the sellers that now need to prove themselves, and unfortunately for the bears Bar E does not scream overt weakness. The buyers temporarily withdrew to see how much supply was left in the market, and it was fairly weak, this action makes sense as we became overbought in our channel.
There would be many scalpers aware of these conditions especially after bar D printed as supply has entered, thus a pullback is on the cards, and bearish scalpers will take 2 or 3 ticks.
As Wyckoffian traders we need to assess the strength or weakness associated with the pullback and incorporate into our story of strength or weakness to build the bigger picture for a potential setup. We are continually assessing the imbalance of demand and supply - this is the true essence of Wyckoff in its purest form
Wyckoff and VSA principles at play in today's action:
Apex (setup)
No supply (setup)
No demand
Trending Conditions
Trend Channels
Climatic Behaviour
Bar by Bar Analysis
Multiple Time Frame Alignment
Wyckoff Logic
If you have a chance can you look at my entries from Friday? I missed the first one you took I circled in Green. I guess I should have been more biased long sooner, but it only became clearer to me after the change of behavior in the wave volume after the break of the Apex.
It took me two entries to get a decent trade to the long side, I'm wondering how I could have avoided the first losing entry I took. If you were not long already was it something you would have considered and if not why not? I think I generally see more setups then you do and trying to figure out how and when to stand aside to avoid being overly aggressive.
I know you didn't take #3 because you mentioned it lacked enough structure, I'm wondering if what I pointed out on my chart could warrant and entry in your mind?
Thank you!!
ps. I know you don't mention it, but curious if you've found any value from Market Internals like Tick/Advance Decline line, etc. or looking at correlated markets like YM/NQ to help get a better read on things?
