fourtiwinks, not to speak for monoid but I gave at least three points out. How you establish those are up to you, but they are in my writings.
Do it the other way around. Select a TA methodology that makes sense to you (if you seek objectivity, use objectivity also as a selection criterion). I mentioned a few in my previous post, and I am sure there are many more. If you are like me, you might end up choosing multiple! Then use it to understand the market. As you begin to understand the market thru' the TA methodology, you will most likely start modifying that TA methodology (a.k.a Framework) to suit your needs. It will become your own. As your understanding of the market as viewed thru' this framework increases, you will start noticing "repetition" (or 'patterns', a word I use in a very general sense and not just to mean geometrical patterns) in the market. Focus in on those repetitions; As you dig deeper, you will find that the repetitions are not exact but have some variations. Use that to make an abstraction of that repetition -- capturing only the similarities and disregarding the nuances. This is your context. Get to know your context very well -- how it starts, how it ends, when a context starts to form but morphs into something else. If you seek objectivity, create definitions for each of these -- condition for start, conditions for end, condition to discard a context, etc. From there, use your creativity and price action to plan trades. Hope this helps. All the best. Regards, Monoid.
You can study volume and look for volume spikes on accumulation near lows and buy above lowest highs as a breakout, or trendline's off 60 minute charts, or you can find lows by smallest amount of breakage with on most oscillators as divergence.
Ah... finally... direct price action talk! Looking exactly that this direct example you show by annotating my chart, this level of 4435 was actually one of the daily lows of this range that we were in these past few days. (it just so happened that on this day, March 4, price broke below by 10 points before coming back up. Using your outlined method, I might therefore want to go long, if I'm understanding your properly, at this outlined spot given the first 3 spikes that you point out, and now price going above the lowest highs. Now clearly this trade doesn't work out, but the idea is certainly sound, so is this what you mean? I on the other hand am wanting to go in a different direction, so perhaps you can comment. If I'm anticipating a long, seeing as I've got a support level I'm tracking, seeing as I see these volume spikes, and I'm just waiting for confirmation with breaking the previous high... why wait for this confirmation? I'm buying at a worse price. If I buy on the lows, and price does drop, I can be out for less than 2 points loss. If I buy above the highs, lets say around 38, instead of at the lows, around 36, I have to take a much bigger risk. I do have more confirmation that price is going higher since I could have a buy limit order waiting up there that wouldn't be hit unless other traders were buying, but the price is not that attractive anymore. Also, when you talk about accumulation at these volume spikes, how can you differentiate this accumulation, as in something that people want? I take it that with futures, there is no accumulation because there is no float, unlike with stocks, so nobody can really "accumulate" contracts, they can just hold a lot of contracts, but this doesn't affect what is available in the market so to speak since any number of contracts can be initiated. Also, with every transaction, there is a buyer and a seller. So by saying accumulation, we are making it sound like buyers are eager to buy, hence why volume goes up, but at the same time, this volume is a reflection of sellers selling, no? If anything, as volume increases and price keeps dropping, isn't this indicative of little buying interest? If the buyers were in control, price would be going up, no? So I'm not sure if accumulation can work on a volume spike as price is dropping. Now I realize that spikes are rather exhaustive, and if the move is too quick, this cannot be sustained, but since these are just 5 second charts, none of this is probably climactic behavior. Anyway, hope I'm not asking dumb questions here or pointing out dumb things as I'm just trying to think my through what I should be thinking given how price is moving.
Now any GOOD method should be able to use on any timeframe, not all methods work as well on all instruments cause some markets tend to chop like ES and others run like Crude Oil, but timeframes of same market all should work. Now I certainly don't trade five second charts, but if it works on one minute, should work on five second. I use $105 stops in Nasdaq, so none of the trades would have lost thereby most got less than target five points, and use three bar time stop to get breakeven plus one tick, but that is the thing about scalping, concentrate on not losing and eventually get bigger winner.
Interesting. So it looks like you are essentially buying what looks to be one tick above the bar that has the volume spike, is this correct? And if the trade hasn't taken off after 3 bars, you'd tried to get out BE +1 tick? What if you're already heavily down right after entry? I find that often, if right after entry, price goes against me and I barely ever see a profit for any amount of time, it is a trade that should be exited right away without even getting to the stop as these barely recover.