Its all about "tests"

Discussion in 'Trading' started by steve46, Jul 11, 2006.

  1. Yep - and now the stop-running reversal to >1270. A long setup is starting to look attractive here, the 10:55 low was not even remotely tested...
     
    #11     Jul 11, 2006
  2. The stop running did take place but on reduced volume of a little better than 4K shares per candle.

    What is happening is that periodically the market runs out of bullets. At this price point, the main players are the captive audiences in the pits, the screen traders, programs and retail

    On the issue of volume, there are two part to the evaluation of it. One is the absolute number of contracts executed during a bar or candle, the other is the size of the bar or candle, or how much "size" is generated by a specific volume. This is called volume spread analysis and it probably deserves its own thread.
     
    #12     Jul 11, 2006
  3. On volume of over 12,000 contracts you can see price testing the midline of the LRC.

    Here is the chart

    The third candle up had volume of 12,404

    The candle that touched the midline had volume of 27,220

    congrats Mike, if you were on board for that train ride.
     
    #13     Jul 11, 2006
  4. Do you smell a reversal here ~ 1273? I can't tell, I got 1.5 pts out of that pop - 2 trades for me and I think I may be done for the day.
     
    #14     Jul 11, 2006
  5. I observe that this market has rallied several times and every time that rally has been followed by a failure move.

    As I have mentioned a number of times. I intend to play it that way generally until the market makes me pay for it.

    So far over a period of weeks, it has paid to play that way.

    As is characteristic, we have a pullback at the Midline of the LRC

    After that I am looking for the same behavior as before. A close above the midline of the LRC on volume of say 10,000 to 12,000 contracts.

    Steve
     
    #15     Jul 11, 2006
  6. One problem is there are many tests. Almost any move can be considered a test and may or may not be predictive.
     
    #16     Jul 11, 2006
  7. Yes that is why one has to learn what tests are important

    Attached is a chart of the current action showing the move to take out the midline of the LRC on volume of 14,295 contracts.

    On the candle following the move through the midline, price tests the today's high, followed by the predictable pullback. Then it takes out today's high on volume of 27,000 contracts.
     
    #17     Jul 11, 2006
  8. Here you can see the move to test the upper channel of the LR

    Those top three candles show volume of 14,000, 27,000 and finally 23,000 contracts.
     
    #18     Jul 11, 2006
  9. Another chart showing a pause in the action and pullback on reduced volume.
     
    #19     Jul 11, 2006
  10. Here is a follow up chart with pivots in place

    One can see that there are a number of tools that can be used to help look at the concept of tests. Pivots are useful in that there are a number of traders who use them and price obviously reacts in the proximity of these "lines in the sand".
     
    #20     Jul 11, 2006