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Wyckoff quizzes


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Wyckoff quizzes

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  #31 (permalink)
 rgakalo 
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Mich62 View Post
Quiz #4: Up or down? What is the story this chart is telling?


Overall I'd vote for down but I wouldn't be shorting this chart. The price is too close to retest of vertical demand bar and in a potential spring position.


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  #32 (permalink)
 Mich62 
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Again some very good analyses. It's definitely not easy (without time & price axis)! Almost as difficult as live trading but this must be the cheapest way to learn for those just discovering Wyckoff.

For those of you who can use some help, start with identifying high volume moves and levels by drawing horizontal lines. Look at the slope of the swings, effort (volume) versus effect (price range) and keep the Wyckoff Schematics in mind. See if it helps and post your answer here, Up or down? Tomorrow I will post the full chart.


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  #33 (permalink)
 josh 
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Mich62 View Post
Again some very good analyses. It's definitely not easy (without time & price axis)! Almost as difficult as live trading but this must be the cheapest way to learn for those just discovering Wyckoff.

Not only is it not easy -- it leads to analyses that draw conclusions based on completely incorrect assumptions.

For example, you drew a line to the 9th bar after each vertical line. I'd venture a guess that this is a 2-hour chart. Each vertical line represents one day. This is why the volume spikes at the same bar every day -- this is the open, or, if it's FX, for example, the opening of other markets which are related. Therefore, "high volume" only means anything when you compare it to the same time on previous days.

So the "failed to rally on high volume" two posts back is a bit misleading. It's not high volume, really, compared to previous days at that time.

Also, was the high volume due to a rate decision, for example? If so, it's artificially high, because it would always be higher than normal. This matters a lot ... it's like saying "city Z is more dangerous than any other city, because more people die in city Z than any other city", when in fact city Z has 10x more people, and in fact a lower death rate. This is just basic statistical normalization and looking at all bars on the chart as if they're identical is a great way to generate an analysis whose results mean nothing because incorrect assumptions were made.

These details matter when analyzing volume, and attempting to analyze a chart without even knowing the period of the bar is making decisions without understanding what you're even looking at. I agree that markets are fractal, but time of day matters when you're comparing volume. At least understand what the normal volume pattern is. I figured this out by looking at the chart, but it would be great to know what the instrument is and to see the x-axis.

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  #34 (permalink)
 Mich62 
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Quiz #4: Answer is down. We see distribution on a 2-hour GC chart.

I must say that I am really impressed by the answers from @58LesPaul, @buylosellhi, @casey44 and @rgakalo. One can see we have some experienced people participating. Kudos to you all.

Thanks also to @josh, critical comments are always welcome.

Of course we see higher or lower volume at certain times like the open, the close, outside cash session or during news events. The volume and the range of the bar(s) compared to each other tell who is in charge at that moment, the bulls or the bears. This can change in an instant on a news event. Traders react and it's shown, as said, in volume and price range.

Looking at the chart we see a (news based) spike up on high volume which leads to a Buying Climax (BC). In this case the market was bought on a higher than expected CPI number on November 10th. Gold is seen by many as hedge for inflation. No need to know because it doesn't matter and we will never know how markets react to fundamental news. As a price trader we look at the price. That's all we need. For those who are interested, " Price is Primary" from Jonathan Hoenig is a recent book on price action (however it contains no setups) and a great read.

After the buying climax we see 7 days of sideways movement forming a range/ledge. Traditional Technical Analyses (Schabacker, Edwards&Magee) calls for a higher probability for the trend to continue i.e. an upside breakout of the range. Fundamentalists are buying gold in anticipation of inflation.

Wyckoff had learned about how to identify large operators' accumulation and distribution of stock with how to take positions in harmony with these big players. His time-tested insights are as valid today as they were when first articulated.

In this case Wyckoffians can identify a distribution pattern. The price of gold subsequently drops more than $100 from the top, that is $10,000 per contract. There is more to say but for now I'll leave it at this. Thank you all.




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  #35 (permalink)
 buylosellhi 
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thanks @Mich62 for the quiz ! Wyckoff was a true master and to think that he could put it all together more than a hundred years ago, without having the ability to quickly pull up a chart and analyze volume etc - its mindboggling. His methods have absolutely stood the test of time. Gann should have interviewed him, rather than the other way around - ha ! I do find the application of his schematics a bit pedantic - more a descriptive model of what happened, rather than a trading model in real time. Hardest part (for me at least) is always when a clear-looking accumulation turns into distribution, and vice versa. And maybe its exactly the opposite for some other folks

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  #36 (permalink)
 trendisyourfriend 
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@Mich62

Thanks to you and the OP for this thread. I wish it will continue for a long time. I am not a Wyckoff student i have just read about theory over the years without really investing too much in it. But somehow i think this thread might offer an excellent opportunity to learn to all. It has become my most visited thread along with the spoo-nalysis thread.

About the schematic you posted. What sequence of price action do you need to see before considering a trade? I have identified some sequences which i would have considered for a trade without using any particular methods except my good old common sense.

Long A: W setup
Long B: 2 legs pull back continuation
Short A: retest of the swing high of the climatic bullish bar
Long C: Breakout failure to the downside. Betting price will re-enter the range and push higher
Short B: pretty obvious.. PB short
Long D: Breakout failure to the downside right at a prominent swing low.

211230_GC_2H_Post_Annotated

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  #37 (permalink)
 rgakalo 
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buylosellhi View Post
thanks @Mich62 for the quiz ! Wyckoff was a true master and to think that he could put it all together more than a hundred years ago, without having the ability to quickly pull up a chart and analyze volume etc - its mindboggling. His methods have absolutely stood the test of time. Gann should have interviewed him, rather than the other way around - ha ! I do find the application of his schematics a bit pedantic - more a descriptive model of what happened, rather than a trading model in real time. Hardest part (for me at least) is always when a clear-looking accumulation turns into distribution, and vice versa. And maybe its exactly the opposite for some other folks

The schematics are not very useful. I've seen people interpret very bearish charts as bullish ones just based on Wyckoff schematics. It is always better to have an open mind to what is really happening versus how market looks according to some model.

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  #38 (permalink)
 rgakalo 
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Quiz #5: up or down?


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  #39 (permalink)
 58LesPaul 
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trendisyourfriend View Post
@Mich62

Thanks to you and the OP for this thread. I wish it will continue for a long time. I am not a Wyckoff student i have just read about theory over the years without really investing too much in it. But somehow i think this thread might offer an excellent opportunity to learn to all. It has become my most visited thread along with the spoo-nalysis thread.

About the schematic you posted. What sequence of price action do you need to see before considering a trade? I have identified some sequences which i would have considered for a trade without using any particular methods except my good old common sense.

Long A: W setup
Long B: 2 legs pull back continuation
Short A: retest of the swing high of the climatic bullish bar
Long C: Breakout failure to the downside. Betting price will re-enter the range and push higher
Short B: pretty obvious.. PB short
Long D: Breakout failure to the downside right at a prominent swing low.

211230_GC_2H_Post_Annotated

Long A and long B are legit entries. Long A would have been iffy considering how that up bar closed near the middle. Entry B was a 2 bar bottom reversal, a nice entry.

Short A was a good entry but after the SOW, you dont look for long entries. So where you label long C should be a short if there is a legit entry.

Remember, you need a SOS to go long and a SOW to go short.

Short B is a legitimate short, I don't see a SOS for long D. Need to wait for price to break 1800 resistance and then pull back to the creek for an entry.

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  #40 (permalink)
 Mich62 
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trendisyourfriend View Post

About the schematic you posted. What sequence of price action do you need to see before considering a trade? I have identified some sequences which i would have considered for a trade without using any particular methods except my good old common sense.

An important question. Certainly there are more sequences to spot and trade depending on ones setups.

For a trade entry I will zoom in on a lower time frame. Best opportunity was the break of the 3-day triangle on November 19 (November 17 and 18 were inside days of the November 16 sell-off from the high forming a 3-day triangle).
See GC 5m chart from November 19, distribution on a 5m lower time frame as part of a higher 2H time frame distribution.


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