base building/accumulation/distribution Seems like the right thing to do is monitor volume-at-price. However I've noticed you don't look at this. (Any particular reason?) Instead it looks like you have honed this particular skill very well and make a judgement call based on the length of time in a trading range.
I'd have to see what you're looking at. If the range is narrow and the bars are wide, I don't know that vol-by-price would help much. As for length of time in the range, Wyckoff explains that price has to build up a force, and that takes time. The greater the force, the greater the result of the unleashing of that force. Itty-bitty force, not much result. Of course, the trader has to decide for himself how much result will be enough.
Per your mention of R on the ES at 955am.... Are you finding this resistance from the last hour or so of Friday's action? jd
Yes and no. That level goes all the way back to 2/11. The action last Friday is just an extension of it.
Comments on today: (1) I believe today is what Neill called "Good Selling". Talking about longs he said "a more gradual advance with constant volume of transaction, as opposed to spurts and wide price-changes, indicates a better quality of buying." That's pretty much what we got today on the short side, heavier in the afternoon than morning too. I too noticed there was not one advance confirmed by volume today. (2) I believe Friday's morning rally Neill would classify "Bad Buying" i.e. short covering and speculative buys. "by and large, the distinction is fine [between good and bad buying] except in those cases where the market rallies in points between sales; then, of course, you know it is mostly short covering, and that it cannot hold." Just read this stuff *this* weekend. Oh well, i'll be ready next time. (3) Your 13:55 bar.. I was thinking "selling climax", I guess I should be thinking "possible selling climax." It seems like after something like that, the short side is now a bit riskier, and the long side ain't attractive either without building a decent base first. I would say, after something like that, it's not a great time to open a new trade.
Neill also talks about "draw whatever s/r you wish" from your charts, but make sure you watch the activity there and don't just assume it's going to be s/r again. Suppose price falls to "support"... what should we look for there that shows it is support.. better yet, what shows that it is no longer support. A good example might be the 1455-1460 level today. I guess i'll keep an eye out for shorts up there if we trace back up.
As an individual trader or investor, you must make up your own mind whether to join the battle or stand aside until it is over. If you are joining the battle, choose sides carefully and limit the amount of resources you are willing to commit. It is better to plan ahead and anticipate when others will join the battle to turn the tide of the conflict. You know that if your market breaches a particular price level, others will be prompted to join the fray and turn the tide so the opposing side capitulates. Focus on the overall goal of why you are involved in the market in the first place. -- Dean Lundell
Strong volume means a large quantity of shares being traded. If demand were adequate, the price would close nearer the top of the bar. As it is, demand is overwhelmed by supply. Hence, the tails.