Discussion in 'Technical Analysis' started by hcour, Feb 23, 2006.

  1. hcour

    hcour Guest

    Hindsight is what it is, but illustrating some of the Wyckoff principles I mentioned in the "Quality Trend" thread, here analyzing GM, focusing on the present trading-range along w/some background: There is a strong intermediate-term downtrend starting mid-Oct following consolidation (even more apparent on the longer-term chart); note how the 20d ema confirms the supply line of the downtrend and both of the strong vol rallies in Oct and Nov are quickly erased at resistance. Mid-Nov to mid-Dec an apex forms and price plummets on the strongest vol on the chart on relatively wide spreads closing on the lows on a shortening-of-thrust to late Dec, a possible SC. Price goes sideways for 8 bars then rallies back to the apex of the Dec triangle on the AR early Jan, breaking the supply line and the 20d ema decisively on good spreads closing on the highs on expanding vol. The subsequent reaction, the Secondary Test of the SC, is very shallow on contracting vol, resistance turned support at the top of the supply line and that little 8-bar consolidation at the SC and the 12/21 hidden gap. Then a nice rally breaking the AR on wide spreads closing on the highs on strong vol to late Jan, back to previous significant s/r at 25ish. Ah, but no follow-thru and may be an upthrust or at the least suggest further consolidation and some supply as the reaction to Feb 9th while at 50% is not supported by the subsequent rally which does absolutely nothing on narrow spreads, lots of dojis, and very low contracting vol.

    Price swings diminish, spreads & vol contract, ma's converge and flatten in the middle of price, as volatility cycles from high in the beginning of the range to low in its present stage.