Price and Volume

Maybe you have covered this and I missed it. Why don't you include prior ~day's action on your charts? Sometimes the prior day's high/low offers a good place to start the trend line.

Attached is a 5 minute chart for IWM. I know you don't trade IWM, so it's just an example. There is about 3 days worth of 5 minute data on my chart.

Banker

 

The PDH/L/C are noted when they matter. Otherwise, they just clutter the chart.

As for the "trend"lines, they are presented within the context of demand and supply to intraday trends. When longer-term trends are pertinent, they are noted, as with the daily chart posted last week.

 

031504 encore

Same chart but with S/R and P/V only

 

Thanks for the two charts for yesterday.
Good looking charts too btw. They print up nice.

I've got a question about a candle that is
confusing to me as I've been getting up to
speed with your PV/SD instruction.
At 1250p yesterday on your charts, you point
out a possible fake out, and a candle which I
believe you are calling a hammer?
I believe I'm starting to understand the
significance of hammers in relation to
volume etc., but do hammers sometimes
look like a doji, in the way you interpret
them anyway? Hammers aren't only candles
with bodies? It's just that the price ended
at a higher place relative to the overall
high and low of that 5 minutes?

jd

 

I don't really care about all the hammer/doji/butterfly/spinning top blah blah, which is why I posted what I did last week on candles.

What matters is that price started here, dropped like a stone to there, then buyers rushed in to propel it back. What you call that is immaterial. The only reason to call it anything, in fact, is to facilitate communication. But the candle jargon has gotten so out of hand that communication is actually hindered, not helped, by the plethora of jargon. Which is why I provide pictures, not just text.

As for jargon, I have a real thing about jargon. I try like hell to limit it. "Support" and "resistance" seem self-evident. Why the hell would anybody want to come up with a set of cutesy names for them? Ditto "trendline", i.e., a line that illustrates the trend. High, low, follow-through, demand, supply -- none of these are jargon. Some, like "pivot", may be avoidable, but to post what it is designed to illustrate would be unwieldy, which is the point of jargon in the first place: shorthand. Unfortunately, many people use it in an exclusionary way, i.e., you don't know the jargon, you're not a member of the club.

Having said all that, it's easier to say "hammer" than go into all that the word refers to more than once, which, again, is why I posted the candlestick terminology list. Ditto "marubozu", which comes up often and which usually matters a lot. As for the rest of it, I don't much care about it.

 

I'm with you on the jargon stuff and
coming up with all kinds of ways to say the
same thing. It bugs me too. With my question
I was just making sure that's what you were doing in this case. I read your posts on candles
and have it printed out here as reference.
I see now that next to "hammer" you say
"recovers to close at or near it's open".
The "at" being the oprative word in this case.

I understand that the point of your note there
was what was happening to price and volume,
not the significance of this candle or that.

jd

 

Hammers are a big deal in the candlestick community, but it's more important to know how and why they're formed than just the fact of their existence. Otherwise, every hammer takes on cosmic significance, and most of them don't amount to beans.

For example, if price falls out of a range, forms several down bars, then hits support and forms a hammer, that carries more significance than the hammers noted on yesterday's chart, which begin in the range, fall just barely out of the range, then close right back in the range again.

 

031604

 

Though this journal uses NQ for its examples, the ES and YM are handy for getting a "big picture" of what's going on.

Since the current focus of the journal is support and resistance (within the context of supply and demand), it's worth looking, particularly at this juncture, at longer-term charts of the YM and ES and drawing trendlines from 8/5 of last year.

The first step for a trader is to determine the current trend of the market.

The second step is to determine one's place in the current trend.

The third step is to determine the proper timing of one's entry into whatever it is he's trading.

Last week I posted a daily chart of the NQ showing the current trend. On that chart, I also showed our place in that trend. Following the same process to determine the trends of the ES and YM and our current place in those trends, then analyzing the price/volume dynamics, will provide clues as to the probable future trend.

For example, while the PV clues have been muddy at best the past few days, it is also true that sellers haven't tried very hard. On the other hand, buyers haven't tried very hard, either (the dog that didn't bark). But, on the third hand, it's time for buyers to fish or cut bait. In other words, look always for the line of least resistance. And the longer we sit here, the more likely the line of least resistance becomes . . .

 

db

First of all, thanks very much for some very good stuff!

I've been studying a lot of market profile stuff and trying to understand the notion of follow through (what mp calls trade facilitation). PLease comment on this idea: if the overall trend has been up and the buyers run out of steam, the sellers aren't anxious (similar to the current situation you describe); wouldn't it be true that the longer price sits in a range at current levels the more like a major reversal? As you say "fish or cut bait". If the longs don't get rewarded for their postion, eventually they're goin sell, and that would be the iniative downward impetus. Does this kind of logic make sense to you?

Thanks again