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The S&P Chronicles - An Amalgamation of Wyckoff, VSA and Price Action
Thanks again. Good trading. I am glad you mentionned a word about the shakeout as this was my interpretation but but i don't have a deep theoretical background around this concept. To me a shakeout is a quick unexpected move against the apparent trend to shake the weak hands out. But you discarded it afterward, while i thought it was valid. I was wondering, what qualities do you like to see in a shakeout?
In Wyckoff we have a ''terminal shakeout'' that occurs at the end of accumulation, a trading range or into a support area. Or we have an ''ordinary shakeout'' that occurs in an uptrend. BOTH achieving the same result. Yesterdays action was a ''terminal shakeout'' on a 5m time frame.
In my trading its the ordinary shakeouts that get all the attention, due to the fact that we can on occasion profit from them with a setup. An ordinary shakeout in an uptrend, will as you said get rid of weak holders, usually (but not always) the next 2 to 3 proceeding bars will eradicate all the selling and start trading above continuing with the uptrend. We get instant confirmation that it was an ordinary shakeout, this means the market has more to give to the upside, we look for reasons to apply bullish setups or trade the shakeout itself
Terminal shakeouts are a little more complex and will often need testing due to it's nature
Thank you so much for your daily chart analysis.
Do you use Point and Figure charts in your daily analysis?? If you do, can you tell us what indicator do you use to chart PNF charts in NT.
1 - A normal upthrust, breaks last swing high before reversing (think of a bull trap, if this helps)
2 - A hidden upthrust, breaks the last ''local bars highs'', before reversing, personally I like to see a close under a few of the prior bars, adds to the picture of weakness. The secret to this concept is too think in multiple time frames - a local hidden upthrust on a 5m chart, would be an upthrust on a 30 sec or 1m chart. It's hidden because we upthrust resistance on a lower time frame. This is most useful in down trending conditions.
Hidden Upthrust's are more advanced and trickier to interpret than standard upthrusts. It had taken a couple of years practice and understanding before I traded the setup
