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Wyckoff Trading Method
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Wyckoff Trading Method

  #171 (permalink)
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ctmvas View Post
This chart of the 6A futures must be the biggest violator of the Wyckoff trading method. Let me explain why…
Bar 1 – Bar closes lower, with increased volume than the previous. This is bearish, the next bar should have been down, but the next bar was up. How did that happen? I don't think you can say that there should be anything regarding the markets. There only is what that market is. We have to work with what it gives not what we think it should be. So, Bar 1 is a down bar, but it also has a narrow spread or range and the close is in the middle of the bar. So it is a down bar, but there is buying taking place.
Bar 2- Bar closes lower, with increased volume. Next bar is up? Then again why did that happen? You label the Red down bar as bar 2, but the bar in between in important. Volume increased from bar 1 and price tried to go higher and couldn't and it closed in the middle again. Increase in volume and a weak close with a narrow spread. So far looks weak. The Red down bar has in increase in volume and is a wide spread or range and closes on the low. Supply is taking over. More weakness.
Bar 3 – Bar closes lower than previous with increased volume. Next bar should have been down, but instead it went up. Again, no should, but also notice the two green bars in between 2 and 3. Low volume, weak rally and you get bar 3, but bar 3 has less volume that bar 2, so even though weak it's not as weak and its closing off the low.
Bar 4- Bar closes higher than previous with increased volume. Next bar should go up, but instead it was a down bar. Bar 4 shows you that things may be changing and that the level is of interest. Price dips below bar 3 and closes higher than bar 3 on more volume than bar 3.

If an instrument is in a trading range it can bounce back and fourth and and down working through the supply and demand. If supply over rules it will go lower and if demand over rules it will go higher. In order to go higher the supply needs to be depleted first, so you get "tests" which brings price back down looking for supply.
Bar 5- Closes lower than previous bar with increased volume. What should happen next..the next bar should be down, but instead it went up. Yes, bar 5 closes lower on increased volume, but its spread or range is narrow. and its closing off the lows. Its the highest volume on the chart yet it could not make a new low and stay down there. Buying is coming in making the spread narrow and supporting price.

After bar 5 you get a rally up to near where bar 1 is. That is where supply was last so you get a reaction down. Look how weak the volume on the reaction down is . Lack of supply.

Bar 6 is a test of supply and there is some because volume increases, but it is far from making new lows. the bar after 6 dips lower than bar 6 and gets bought back up. The next bar closes lower than the green bar, but higher than the close of bar 6 and on less volume. This is a test as well. Bar 7 starts to rise on light volume. This could be absorption of the supply to the left. The supply to the left can be seen as the consolidation area to the left. Even the bars after bar 7 look like absorption. Look at the bar on 12/27. It dipped down and closed near its high on light volume. This is a hidden test and shows not supply. No supply so price rallies up. Now at the highs you have light volume and a new high. There is a lack of demand and in early Jan Supply comes back in and price moves down. This can continue for some time with in this range. I hope this helps.

David
This continuously occurred on the other bars that I circled.

I commented in your quote. By the way, no expert opinion, just how I see it.

D

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  #172 (permalink)
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ctmvas View Post
This chart of the 6A futures must be the biggest violator of the Wyckoff trading method. Let me explain why…
Bar 1 – Bar closes lower, with increased volume than the previous. This is bearish, the next bar should have been down, but the next bar was up. How did that happen?
Bar 2- Bar closes lower, with increased volume. Next bar is up? Then again why did that happen?
Bar 3 – Bar closes lower than previous with increased volume. Next bar should have been down, but instead it went up.
Bar 4- Bar closes higher than previous with increased volume. Next bar should go up, but instead it was a down bar.
Bar 5- Closes lower than previous bar with increased volume. What should happen next..the next bar should be down, but instead it went up.
This continuously occurred on the other bars that I circled.

Hello Ctmvas. Actually it does not violate anything. Let me explain.

From the picture you have provided, sellers/profit taking of significance are beginning to appear three bars before Bar 1, meaning the first bar in the picture. Next bar goes up on lighter volume and wider spread which shows buyers in the market not being absorbed to any significant degree.

Bar 1: Volume increases meaning buyers are overcome by sellers absorbing their buying and it temporarily tips a bit over.
Bar between 1 and 2: The most important. Volume increases, price has gone up again, but price goes nowhere. This means that sellers have taken control and have absorbed all the buying. Balance tips over to demand side in Bar 2.
Bar 2: But! Now the same people who where making the price go down are starting to do some serious buying/accumulation after they made people sell. The first sign of this is the abnormal volume bar going over your volume average line. Next, we have two bars going up on lower volume. Meaning it tipped over to the demand side because of heavy buying, but they stopped buying waiting for lower levels. We see this because price reaction was on decreasing volume over the two bars. So this is actually the first sign of accumulation in the picture you provided. Meaning not bearish even if it went down, but actually bullish.
Bar 3: A more clean Bear bar for awhile, but then significant buying are coming into it because of next Bar 4 is up. So accumulation has started again. Notice that Bar 2 was on narrower spread, but with higher volume.
Bar 5: A selling climax. A buying gorgery into all the selling with ultra high volume. Next bar goes up as a continuation of all the gorgery.
Bar 6: A new test with selling absorption on higher volume, meaning buying coming in and again makes price go up.
Relatively narrow downbar before Bar 7 are showing less volume than many previous bars. Meaning significant selling has gone.
Bar 7: When selling gone it is easy to mark up price.

Hope this was helpful and interesting Ctmvas

“If you wish to see the truth, then hold no opinions for or against anything.” - Hsin Hsin Ming
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  #173 (permalink)
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David_R View Post
I commented in your quote. By the way, no expert opinion, just how I see it.

D

David I did not see your post until I had posted my own . I have not read it yet and I am not going to before tomorrow. It's 1:30am here, so going to bed.

Have a nice evening,
Laurus

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Laurus12 View Post
David I did not see your post until I had posted my own . I have not read it yet and I am not going to before tomorrow. It's 1:30am here, so going to bed.

Have a nice evening,
Laurus

No problem. It was nice to see that i said much of the same thing you said. I hope you slept well.

David

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  #175 (permalink)
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David_R View Post
Well,

It looks like CL broke down instead of rallying. Does that mean its not accum? I really thought it was accum, so this makes it hard to determine what the heck is going on.

I actually took a trade. Risk was about 15 tics and looking for a breakout so was holding it. was up about 60 ticks. I had moved stop to above entry so a free trade.

D


wohh .. please tell me u didnt took the trade because i analyzied an accumulation ????!!!!! .. never take a trade
cause of a chart based on my analysis .. never take a trade caues by someoneleses analysis. this is a big no go..

iam a beginner in wyckoff and vsa .. learn and practice this since 7 months or so... and i for mysellf dont take trades
off my analsis too not for real money atm.. cause iam still in the learning process and build my trading plan upon the new learned material.

good to see that u took a free trade.. thats somewaht similar how i trade too....but please never do that again
cause i have analyzed something that sounds good... i dont make calls here . and i never will do.. just learning and practicing.. and getting better on it..

even if i say i took a trade here and there.. cause of this and that.. dont copy that.. as its upon my trading plan.. and expirience..and that might not fit yours or everyone elses..

if someone is interrested i can post my actual trading plan.. based on spot forex pairs.. just to let u guys know how i would trade.. but thats just for interrest .. and it wont suit evryone.. as its based on my characteristics and psychology...


so to me its still accumulating .. as how i have read and learned it is if volume increases on or near resistance
then there is force or demand behind it to go higher .. if volume decrases near or at the support there is no interrest into a down move.. except price breaks below the support line .. and rallies back above it on high volume .. then demand swamps supply .. forming a spring.. or similar.. ie.. professionals absorbing supply .. demand increases..

to me the price fall was caused by the news that mubarak will no longer be the president of egypt.. that and all news will be catalysators . wich means .. that this is just another opportunity for the professionals.. to absorb supply from the public.. we have too watch know what happens on the chart ,, if the supply gets absorbed . wich i think will happen.. then its still accumulation... and the pros will rub there hands.. to get such cheap prices again..

take care

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  #176 (permalink)
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ctmvas View Post
This chart of the 6A futures must be the biggest violator of the Wyckoff trading method. Let me explain why…
Bar 1 – Bar closes lower, with increased volume than the previous. This is bearish, the next bar should have been down, but the next bar was up. How did that happen? First off nothing should happen , the bar 1 closes well off its lows measn deamnd swamps supply
wich is a sign of strenght


Bar 2- Bar closes lower, with increased volume. Next bar is up? Then again why did that happen?
a high volume downbar with the next bar beeing an upbar measn that thare has been some heavy buying into the down bar .. why else the next bar can be up ?? .. someone was byuing into the supply .. wich is btw.. the best way to buy .. as u wont bid prices up against your buying.. when accumulating

Bar 3 – Bar closes lower than previous with increased volume. Next bar should have been down, but instead it went up.
again SHOULD have ??? nothing Should have!!!! high volume down bars aswell s upbars.. are a playing ground for the proffessionals to buy into a sell off or either to sell into a bull run....
Bar 4- Bar closes higher than previous with increased volume. Next bar should go up, but instead it was a down bar.
as this is a climactic action . spread upon four bars starting at bar 3 till bar 6 wich u didnt labeld
and bar 4 and 5 are closing well of its lows.. there are clear signs that demand is coming in heavily....

Bar 5- Closes lower than previous bar with increased volume. What should happen next..the next bar should be down, but instead it went up.
SHOULD .. tztz.. stop that thinking that something should happen.. else the marklet will bitch slap u hard..
again we have serious signs of strenght in the background .. and this is part of a climactic action again demand swapms supply here as it closes off its lows

This continuously occurred on the other bars that I circled.

as we have cleared the way caused by that dramatic selling wich has been absorbed.. the price advances with nearly .. no effort.. and no trouble cause most off the supply has been absorbed in the down bars.. ..

u really need to study more material about wyckoff and vsa.. and get rid off that, should.. thinking.... bad behaviour..
judge the markets by its own action...

cheerz

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  #177 (permalink)
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Hello

A very very nice thread
Bar 1 up bar close on the high.with icrease in volume.
Bar 2 up bar close on the high made and higher high from prev bar but but low volume with the same range of bar 1
Bar 3 lack of demand no seller there but only lack of demand.
bar 4 icrease in volume little decrease.Has the same volume of the bar 3 but the range is reduced. Lack of demand No sellers there.
Bar 5 Lack of demand with clusered closed bars 3 4 5
Bar 6 sellers stepped in the bar closes on the low It's a selling bar Tested the high of the bar 3.Vertical supply bar or a selling bar. Long covering bar ?
Bar 7 ? long covering or we saw seller at bar 6 next bar must to be down but on bar 7 there is an icrease of volume
but Little result ( price range) Great Effort ( Icrease in volume )
Bar 8 Low volume ( Is not lack of seller ) they sold on bar 6 Bar 6 is the new background. Bar 8 went up and closed on the low.
Bar 9 Sellers stepped in .
Bars 10 -19 repeat
Bar 20 icrease in volume but the range is more little than the range of the bar 19
Bar 21 icrease in volume Great effort but little result
Bar 22 decrease in volume high range close someone is buying this spring we still have weakness in the background.
Buth the close is above bar 20
Bar 25 lack of demand restest of bar 16 creek defended very well
bar 26 True range ??? Is it right my drawing ? i can't understand how to include the gap in the following bar High range bar but little effort(volume) surely we are around Christmas hollidays and volume dry up.
Bar 27 increase in volume the market must to go down but it's Springs( lack of demand price must to go down to search more demand) Bar 27 is a test of the reaction high of bar 22 ?
Bars 32 seller stepped in VSB vertical supply bar
Bar 33 -38 high end close but the volume dry up
Bar 43 CM defends the creek not high increase of volume at the creek not wide range bars.
I got a big problem where is the rollover volume ? In December Or January
Australin Dollar is in to a trading range ( Death zone)

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  #178 (permalink)
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PrymeTyme View Post
.... i analyzied an accumulation ????!!!!! .. never take a trade
cause of a chart based on my analysis ..... so to me its still accumulating .. as how i have read and learned it is if volume increases on or near resistance then there is force or demand behind it to go higher .. if volume decrases near or at the support there is no interrest into a down move.. except price breaks below the support line .. and rallies back above it on high volume .. then demand swamps supply .. forming a spring.. or similar.. ie.. professionals absorbing supply .. demand increases.....

take care

Hello Pryme.

Except from when it comes to markdowns or markups you actually got it the wrong way around. I will explain it in the perspective of Wyckoffs law of Effort vs. Result. I have also added some comments in the 60min picture.

- First, if the CL discussed was accumulation this would mean that the "Composite Man" would be settling with worst buying prices in the trading range on highest trading volume, meaning very big risk. Actually this is what retailers/amateurs are doing. Meaning buying on up bars and selling on down bars.
- Second if we take a look at the highest volume bars (Effort) and price (Result) towards the top of the trading range what was the result? The prices went down right? Actually it had two full bar reversals, meaning the balance as in the law of Supply & Demand tipped over to supply side and then price continued down.
- It is important to have in mind that the "Composite Man" are buying into down bars and selling into up bars, this preferably on extreme sentiment with the masses so that they can trade with high volume. This is what Wyckoff talks about when misleading news is a part of the "Composite Mans" campaign. In connection with this I think it is interesting that because of tick volume in spot forex is generally seen as unusable, there is instead a focus on the phenomena that markets turn on sentiment extremes, but it is the same thing. People are using sentiment indicators, but I definitely think that a ultra high tick volume bar from a good source would give both the best indication and possibility for timing with spot fx.
- Conclusion is that with accumulation you would like to have high volume down bars at bottom of trading range, meaning strength in the background, and as confirmation high volume on markup breaking out of the range as confirmation of new or continuation of trend where you buy at LPS. The two scenarios where I would definitely be more aggressive is if there was a Spring after accumulation or UpThrust after distribution.

Taking the above in consideration the CL was actually a good sell setup. If not already read it, also take a look at my previous CL post.

Edit: Remember that a important part of markdowns and markups, or volatile breakouts, is to scare people off making sure they do not trade against the "Composite Man". Thus giving "Composite Man" low as possible risk. Therefore an important point; If the first or second high volume tops in the trading range on CL had been "Composite Man"-buying, it should have broken out and continued up. Remember the "Composite Man" is trading with high volume, so to not put price up or down against themselves they need campaigns over time with a lot of small positions to build their Cause.

Hope this made things clearer . These are important principles to understand when analyzing volume/price.

Laurus

“If you wish to see the truth, then hold no opinions for or against anything.” - Hsin Hsin Ming
Attached Thumbnails
Wyckoff Trading Method-redist.-cl-60min-12.02.11.png  

Last edited by Laurus12; February 12th, 2011 at 11:41 AM.
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  #179 (permalink)
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PrymeTyme View Post
wohh .. please tell me u didnt took the trade because i analyzied an accumulation ????!!!!! .. never take a trade
cause of a chart based on my analysis .. never take a trade caues by someoneleses analysis. this is a big no go..

iam a beginner in wyckoff and vsa .. learn and practice this since 7 months or so... and i for mysellf dont take trades
off my analsis too not for real money atm.. cause iam still in the learning process and build my trading plan upon the new learned material.

good to see that u took a free trade.. thats somewaht similar how i trade too....but please never do that again
cause i have analyzed something that sounds good... i dont make calls here . and i never will do.. just learning and practicing.. and getting better on it..

even if i say i took a trade here and there.. cause of this and that.. dont copy that.. as its upon my trading plan.. and expirience..and that might not fit yours or everyone elses..

if someone is interrested i can post my actual trading plan.. based on spot forex pairs.. just to let u guys know how i would trade.. but thats just for interrest .. and it wont suit evryone.. as its based on my characteristics and psychology...


so to me its still accumulating .. as how i have read and learned it is if volume increases on or near resistance
then there is force or demand behind it to go higher .. if volume decrases near or at the support there is no interrest into a down move.. except price breaks below the support line .. and rallies back above it on high volume .. then demand swamps supply .. forming a spring.. or similar.. ie.. professionals absorbing supply .. demand increases..

to me the price fall was caused by the news that mubarak will no longer be the president of egypt.. that and all news will be catalysators . wich means .. that this is just another opportunity for the professionals.. to absorb supply from the public.. we have too watch know what happens on the chart ,, if the supply gets absorbed . wich i think will happen.. then its still accumulation... and the pros will rub there hands.. to get such cheap prices again..

take care

I did not take the trade based on what you said, but based on what I thought. I think Like Laurus said, it would be better to look at a 60 min instead of a 15min. It was clearer that there was distribution taking place at the highs.

D

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  #180 (permalink)
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Laurus12 View Post
Hello Pryme.

Except from when it comes to markdowns or markups you actually got it the wrong way around. I will explain it in the perspective of Wyckoffs law of Effort vs. Result. I have also added some comments in the 60min picture.

- First, if the CL discussed was accumulation this would mean that the "Composite Man" would be settling with worst buying prices in the trading range on highest trading volume, meaning very big risk. Actually this is what retailers/amateurs are doing. Meaning buying on up bars and selling on down bars.
- Second if we take a look at the highest volume bars (Effort) and price (Result) towards the top of the trading range what was the result? The prices went down right? Actually it had two full bar reversals, meaning the balance as in the law of Supply & Demand tipped over to supply side and then price continued down.
- It is important to have in mind that the "Composite Man" are buying into down bars and selling into up bars, this preferably on extreme sentiment with the masses so that they can trade with high volume. This is what Wyckoff talks about when misleading news is a part of the "Composite Mans" campaign. In connection with this I think it is interesting that because of tick volume in spot forex is generally seen as unusable, there is instead a focus on the phenomena that markets turn on sentiment extremes, but it is the same thing. People are using sentiment indicators, but I definitely think that a ultra high tick volume bar from a good source would give both the best indication and possibility for timing with spot fx.
- Conclusion is that with accumulation you would like to have high volume down bars at bottom of trading range, meaning strength in the background, and as confirmation high volume on markup breaking out of the range as confirmation of new or continuation of trend where you buy at LPS. The two scenarios where I would definitely be more aggressive is if there was a Spring after accumulation or UpThrust after distribution.

Taking the above in consideration the CL was actually a good sell setup. If not already read it, also take a look at my previous CL post.

Edit: Remember that a important part of markdowns and markups, or volatile breakouts, is to scare people off making sure they do not trade against the "Composite Man". Thus giving "Composite Man" low as possible risk. Therefore an important point; If the first or second high volume tops in the trading range on CL had been "Composite Man"-buying, it should have broken out and continued up. Remember the "Composite Man" is trading with high volume, so to not put price up or down against themselves they need campaigns over time with a lot of small positions to build their Cause.

Hope this made things clearer . These are important principles to understand when analyzing volume/price.

Laurus

Hi Laurus

To me this is still an area of accumulation .. and we are in the stage of a terminal shakeout ATM..

here is why:

we need to see demand coming in.. higher volume on rallie bars Not excessive thou
but accompanied by a advance in price...

also the volume should dry out on reactions.. smaller spreads .. ie no selling pressure..

we should make conclusions of waht we see.. in a trading range..
and if we see an increase of volume in upswings.. we have evidence that demand is getting stronger .. if reactions within the same trading range.. are on lower or dimnishing volume.. we have clear signs of strenght in there.. ie.. that this is rather an accumulation..


however u are right when u say that sm is selling into upbars.. on high or ultra high volume.. same goes for buying into downbars.. on ultra high volume...

but as on CL that doesent mean that they are distributing they are looking where and how much supply is

be aware that the sm is looking closely waht is happening on the charts.. and if they see that at a certain area is full of supply.. and they are accumulating or bullish
they will try to remove that supply.. by testing .. absorbing , shakeouts .. etc..

also on cl chart.. the highest volume is on the upbar 1 at area A .. but that doesent mean that the sm.. was buying at that bar.. they bought earlier.. the weak holders are morelikley to have bought there.. as they got sucked in at the tops.. etc..

this manuver and as it happens on the begining of the range.. is usually.. done by sm.. to save some money.. and let others get burned.. by finding supply levels.. and how hard they will get to penetrete or removed.. in the future...

the next highest volume bar .. is bar 2 in area C .. however this is a down bar.. with the next bar being an up bar.. someone has absorbed the supply here... as seen on the low volume up bar.. 4 .. and u see clearly that there is no real supply left,, as the market holds at at that level for the first time in that range.....

at this point no trading from the sm was done.. as they sit back and watch waht the market is doing now at that level.. and as prices hold.. they can be assured that.. most of the supply has been absorbed.. so they now .. may start to test the supply again .. below the support line... or as i see it.. they startet a terminal shakeout.. to get ready for the next markup....

as bar 1 in area D . has high volume as it dipped below the support .. they know now that there has been new supply added most likely by some weak bulls.. and as they know that the former area of supply has been cleared .. they have to get rid off the weak bulls.. as they could create a new area off supply when they try to advance.. so they start the terminal shakeout

CHART

A

1.)
highest volume with bar closing of its highs supply hits the market..
the following reaction drops off in volume

2. this bar retests the breakout . and closes in the middle . demand is coming in here

so actually this is a succesfull retest of the breakout . as the volume decareses on the reaction . and we make higher low..



B.)

1.) high volume down bar . wich cloese clearly of its highs
supply swamps the market again ..
the following down swing is again on decraesed volume
as we come closes to the first retested area ..

2.)
this bar dips into the lows of previous breakout area .. just to rallie back and closes on its highs .. on average volume
this is a sign of strenght



C
1.)
wide spread upbar on high volume closing on its highs
emand comes in


2.)
volume increases clearly as we rallie into a former area of supply again
and the bar closes on its lows .. supply is still present and swapms demand..


3.) but with this bar ralling back above the high of previous bar and cloes above
the supply has been absorbed...

then price falls again on a wide spread down bar .. on lower volume..
where no following thru is vissible..

4.)
this low volume wide spread upbar . shows clearly that there is no supply left at this area.. as the supply has been absorbed... .. hence it has no problöem in advancing..



D
1 a down bar with the close well of its lows.. on high volume deamnd comes in again.. (Testing supply)

2.wide spread down bar on high volume with the close off its lows.. hiden buying ?

bar 3 drops of in volume and closes of its lows .. again hidden buying ?



then prices start to drift and we get small spreads.. and closes cluster ..

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