You are trying to make sense of the decision of millions of individuals. Why bother? Even if you knew (though how could you) each new event in the future is unique.
Chart patterns by itself at the most have a 50/50 chance of working out. Thomas Bulkowski, in his Encyclopedia of Chart Patterns book (I hope recall the title accurately) did a study of the various chart patterns and it was close to a 50/50 result in most of the chart patterns if I recall correctly. The StockCharts by itself is full of information, it is up to you to discover the imbalance of supply and demand and take the stronger side. That is all trading is. Do not expect to bat or hit 100%, not going to happen. More importantly, take care of your risk management as real monies at risk each time you place a real time trade. Keep your losses small. That is the only part of trading you have control over. The profits will come provided you have an edge in the trading system you are using.
You want to study "order book" which is where the action is. The chart is almost nothing in comparison. The chart is just a belch after the order book meal.
%% Trend analysis is the fun part; 10 year monthly chart on SPY,green buyers rule. One year daily SPY chart\ sellers rule below 200day moving aVerage. Its really that simple \its the execution in trading that can be difficult, sometimes.. IBD books clears up much of the confusion.................................................Wisdom is profitable to direct
it helps to throw diagonal trend lines out the window. They can be helpful, but not for this specific question. To get a good understanding of buyers and sellers, switch to supply and demand. think and draw them in horizontal lines. I’m between the supply and demand lines, the bars are flinging away, while the bulls and the bears battle out who wins in between these areas. The movement in price between these areas represents either accumulation, or distribution. Which one, you can’t know for sure, but some leaves can be read(no pattern always works). I don’t like being in positions that open in these battlegrounds of buyers and sellers. For example- see current CL… above 96, below 115? No thanks. Why is 115 important? How did I identify this as supply? That’s an exercise I’ll leave to you, but it’s clearly a level where sellers show up. Past that, and the sellers are gone. They’ve all sold. You’re left with mostly buyers. The bears sold up to 115. (What about the move to 130 though? Overshoots happen and is why the word whipsaw exists. The world isn’t perfect, deal with it). Buyers clearly show up at 96. I’m a buyer too at 96. If it drops below, I’m out, as sellers were stronger at that key level. It’s also helpful not to think of it as an exact price. Draw your lines with a crayon, not a pencil. hopefully this is helpful. I wish you the best trading.
And I've got $123.xx as current near term supply level and $109.xx as demand for CL. $128-129 and $94 further out.
Most liquidity is price-sensitive and advertised as resting limit orders. At market turning points they are left unfilled as price moves away. Depending on the timeframe and price level, you'll observe the variance of the size of orders coming through the tape. Market orders are generated by time-sensitive participants. There are two types; 1) Smart money that has an informational advantage. 2) SL's being triggered to close a position. Order's are fuel. If there isn't enough orders to fuel the goal of facilitating trading volume, in continuous dual-auction markets, the market will shift sentiment in a direction that will. There are certain price levels that attract the attention of longer term participants with larger accounts. When sentiment reaches these levels you'll observe larger orders being printed on T&S. Smart money can have small or large accounts. Large accounts doesn't necessarily mean it's smart money.