I thought that occured on the gap up from December 10th. It re-tested it that day and once again 2 days later. Every time it's rallied and it had rejected the highs, forming candles with upper (distribution) wicks. It has left me somewhat perplexed because chart-wise I never saw the 28.86-28.90 area as resistance.
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The way I see it is on the attached chart. Aggressive traders enter immediately they notice reluctance to go back to creek jumped over. And put their stops below the demand bar that did the jumping. Conservative traders wait for a demand bar(up bar showing ease of movement with wide spread and comparatively better volume) to appear.
The following user says Thank You to metobi1 for this post:
My thoughts are on the attachment. Try to think in terms of the balance between buyers and sellers, in every range you encounter, and determine who has the upper hand, hence which direction the market would go.
Always thinking in terms of accumulation or distribution has a way of making one biased towards a direction and for many it makes for refusing to admit error and shifting towards the proper direction. Sometimes it also causes confusion as , everything could point to accumulation in your mind and analyses but the market would sell greatly for a while before going back up.
Markets would ultimately go where they would go, even the heavy investors (smart money) get it wrong many times. So first be sure to understand the concepts of listening to the markets and then look for where the balance shifts always.
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Remember a simple concept that will keep you out of trouble: "Price Structure Trumps Everything Else". ... And I mean EVERYTHING else. That includes volume.
Volume is just a supporting cast to price structure.. In the case you reference , price tried to break out of a trading range twice. Both times the break out bar could not close outside of the range even though on higher volume. This is indicative of a Wyckoff spring or failed breakout. It is that simple..
Don't be as concerned about if you get accumulation or distribution correct. Identify when the market is in a trading range or trend and watch how it acts between the interface between the 2 phases...
Hope this helps. Best trading to you.
Last edited by Traderwolf; December 20th, 2013 at 08:15 AM.
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