I took a look at SLV. I don't see enough to go long here. Price is moving into a congestion area. Price spent nearly a year in this 4 point range before igniting a big up move back in 09-10. However I don't see the lengthening of the buying waves or the retraction of the selling waves indicating a change in behavior. I have no idea what your timeframe is so it may just be I'm looking bigger picture than you are.
What price did years ago gives us a context and a heads up to be alert to potential changes around previous levels of congestion. Entering the previous congestion area doesn't imply the repetition of previous behaviour, and in this case another congestion. Now price could start forming a trading range here but as of now we don't know that, and won't know it until price fails at some swing high and then again at a swing low. In the absence of that confirmation I attempt a long knowing very well it could fail and hence a finger on the exit button. This is to ensure that in case price decides to move up I am not left behind. You are looking at only the lengths of the waves on your weekly chart. My looking at a weekly line chart doesn't tell me much about the shortening of the selling waves but does indicate the change in momentum as evident by the breach of the supply line. This breach is only a subtle hint that and from here price could choose to go sideways, upwards or continue it's descent down. Again to stay in the game I attempt the entry with a close eye at the price or any weakening. Now the wording and the terminology you're using is valid. On longer bar-intervals (line-interval?) like a weekly it's a bit tougher to identify such an early signal that came from a daily bar interval chart. Still, I would add that if you wait for the shortening of the selling waves and the lengthening of the buying wave price probably would be moving further and further away. The classic problem of information risk versus the price risk comes to mind here. In this case I choose a spot where the information risk is greater but price risk is smaller. Now to be fair your risk tolerance is probably different from my risk tolerance and hence what you prefer to be an acceptable entry may be too late from my perspective and what I prefer might be too early from your perspective. My trading plan has a specific criteria for entry and exit. Although it is highly influenced by the current flow of price it still must pass certain checks before I would engage in an entry. This one passed those tests and hence the entry. I do pay 'some' attention to lengthening and shortening of waves however it's a secondary consideration. The major considerations for me are price, support/resistance, supply/demand, trend and volume. Price is not collapsing, and is rebounding around support/resistance level, supply has been lower here otherwise of course price would have fallen, the trend is in transition (SL break), and volume after showing potential climaxes on multiple occasions is lower on current retracement. If you notice the criteria for my entry is met and hence I go long. Here's the weekly line chart for SLV and here you'll notice two things. The breach of supply line and the price rise and the subsequent drop (retracement). Now as the rise came I initiated the long position. Instead of looking at only the wave lengths I am looking at the fluctuations that happen within each of those waves to gather a bit more information. It's just how I do things and assumed how W would have done it. Please keep in mind all this is the theory and if price weakens I'll be the first one to bail out. Gringo
Today price didn't continue upwards as I had anticipated. This lack of follow through is in my eyes reason enough to reduce the exposure. This means further weakness might make me exit the entire position and further strength might make me re-enter. Price for now seems to like 19 area and below it gets more dangerous for longs. Gringo
My first day back at trading since Friday, July 26, and I get to enjoy my best day of NQ trading to date. One thing I worked on last week when I took a week off from active trading to observe price, was this: How do I get into a move that is continuing if I missed the first op. To this I added the thought that if I were already in a trade, an price action provided what would otherwise be a good entry in the direction of the trade, I would treat that as another trade, and enter as I would if I had no position at all. Price opened more or less in the middle of yesterday's range. It rallied to 36.25, pulled back to 33.50, and rallied back to 36.50, where it stalled again. I shorted at 34.50 during the 9:40 bar interval. I had 28 as anticipated support, and below that 12.25 and 5. Price dropped to 28, and then through it without much difficulty, and fell to 25.25. No reason not to stay short unless I saw a HL and followed by a HH. Price then formed a hinge, with the midpoint just below yesterday's 28 low. I added to my short position at 26.25 during the 10:11 bar interval. My plan was to hold for 3112.25 unless I saw a HL and HH. The downward momentum slowed, but downward pressure remained. I drew a supply line (seen on the chart) which was briefly broken - a break that was quickly rejected - during the 10:28 bar. I not only remained short, but I added again to my short position at 22.75 during the 10:30 bar interval. The plan remained to hold for 2112.25 unless I saw a HL/HH. Price then declined and bounced from 15.50 to 18, fell to a new low at 14.50, and bounced again to 18. I moved my stop to 18.25. Price pulled back to 16.50 and for a couple of minutes it was stuck between 16.50 - 17.25. T&S was quiet. I decided I'd add to my short position again at 16.25, which was filled during the 10:50 bar. My plan remained to stay short until 12.25 or a HL/HH. This changed when 12.25 melted like a popscicle in July to borrow a phrase from DbPhoenix, and my new plan was to stay short until 5, unless price showed a HL/HH. Price dropped to 6.25, rallied to 10.25, pulled back to8.50, and then for the first time since the open, a HH and I exited all contracts at 10.50/10.75. I am now leaving for work. I made more this morning than I do in an average month from my regular employment. I feel good. Elated even. If only all days would be this easy. I know full well that they won't. I may have even made some mistakes and profited in spite of them - I will review my trades tonight. I spent the last week observing price, and reading Wyckoff, and studying the threads and posts of DbPhoenix and nodoji. It was a week well spent. Comments, as always, are welcomed.
I would not have pegged support so low. Price tested 30 several times yesterday and thrust only once toward 28. In that context, note that price retraced to 30 after breaking below this morning, giving you an additional entry op.
What your chart shows looks just like how I get into a strong trending move. I love this stuff. These days don't happen all the time, but milk them when they do! Nice work
When you say you would not have pegged support so low, do you mean my choice of 28 over 30? Or do you mean my looking for lower levels at 12 and 5? Here is what I was/am looking at: I used 28 as the lower bound for 28-30 anticipated support area. Once 28 broke so quickly, I started looking for 28-30 to be anticipated resistance. Price managed to rally to 29.75, so it stayed below 30, the upper bound of that S/R area. Below that, I just looked back on the 60 minute bar interval to remind of where price came from and how it got from there to where it was. 3112.25 was the low of the 10 AM bar intervaal on 8/2, and 3105 was the high of the 3/4 PM bar intervals on 7/31. Below that level, I am watching 3094.75 (high during the 12 PM bar interval on 7/30) and then 3082 which is more or less the midpoint from the 7/23 3023.50 low to the 8/5 3140.25 high. After today's 1306.25 low, price rallied back to the level of my 3rd short entry stopping at 22.25. The rest of the day has a hinge-like quality to it, with a 3114.25 midpoint. Should price open within that hinge, I'll be watching for indications of whether today's sell-off is done with, and higher prices resume, or for continued selling pressure. If price opens outside of the hinge, then I will be watching to see what trader's do as price approaches the levels I have identified as anticipated levels of support or resistance. Thank you for your continued help, DbPhoenix!
Thank you. A few weeks ago I posted a chart here where I had tried to fight this same type of move, and had two back to back losses as a result. I did a good amount of back testing last week and I think I discovered a few things I had been missing before. Had I traded that particular day with the same eyes and approach I used today, I would have had a nice trade and added another nice trade to it. I said before that I thought I'd be farther along at this point than I am. The switch from trading stocks to trading the NQ has shown me how big some of my knowledge gaps are. But I am going to keep on working on them. Your post history has been very beneficial to me during the last few weeks, especially as I was able to "view" your own development from newbie stock trader to seasoned futures trader. Very helpful - thank you!