switching gears to Price Action via SLA

An example of why I like to leave people alone if at all possible.

 

I'm getting there that's for sure. The movement over the last few days has been great and things are clearer each day. And yet - more replay to be done...

 

I went back to 1/8 to do some replay. I didn't realize until afterwards that it was the first day I was 'back' and I simmed it live on the 8th. Interesting perspective just one month later. This observation bit is definitely helping me to see things and start to realize that along with identifying ranges and watching price move in and out, that patience is such a crucial component.

Overnight, price had been in about a 10 point range. A test here and there, but for quite a bit, price hovered in this area. About 2 hours before the open, price definitively exited the range and made a HH than the previous day, but before long, the 50% area of the range was visited again.


Just after the open, price couldn't quite get back to the 50% area and then rose to the HH from 2 hours earlier. My chart shows a few numbers, but those numbers to me were noting waves of price movement. I was keeping track.

During observation, it's been very hard for me to not think about entries, but I haven't. However, I have thought about exits - but more to determine if I was reading price correctly or if I'd have done 'x' here, if there would have been a valid reason for doing so. Also I think of exiting - or reasons NOT to because I know that there's no way to make money in the market if you aren't IN the market. Finding reasons to stay in and not exit at the slightest adverse movement is part of what I'm looking for when watching price.



With this chart, the black dotted line was used as a fanned DL. It was broken right after wave 6. I'm realizing that just he break of a DL doesn't mean that the current movement is over. It's pausing or may be over, but it isn't definitive. I'm sure that sounds really basic and like WTH have you been thinking, but observing price has shown me that. While watching at "A" I saw that price had broken my fanned DL and had gotten to the previous pullback area. Price then tried to go up again, but made a LH at "B." But then "C" happened - the pullback didn't go as low as the last pullback. How about you wait a few minutes and see what happens next? I did and price popped up again == no need to exit.

Later on a very similar thing occurred - after wave 9. The DL had been fanned and was quite a bit further from the current price movement, but it was still crossed. "A" and "B" happened inside the DL, but the movement was still the same (price went to a pullback area twice and a LH occurred). When the DL was crossed, price moved below the previous pullback area. In this instance, I would have exited.

 

i guess there is a difference if u are allready in a trade or you looking for an entry.

if u are in a trade "Hope" (beeing green) it will go further (leaving more room)

if u enter a trade "fear" (beeing red) that it will move more against u (leave no room)

 

Watching price move in an out of range areas is becoming more and more interesting to me.

Some of this is like Newton's third law of motion: For every action, there is an equal and opposite action. Price movement around ranges "can" be like that. It's an interesting way to think about it.

 

NQ up 10pts and the ES just sits there.

 

Until now. Bottom dropped out!

 

Same as Friday. ES is an anchor.

 

Replay for 1/12… During the overnight action, price had moved quite a bit. The high was just shy of 4228 and an overnight swing low of right around 4206 had seen some trading action twice. Due to the 2nd hit of 4206 and with price moving up, one could almost view it as a range. Would price stay within it once the NY bell hits?


In this instance, hell no it didn't.

1. Couldn’t make it all the way to the 50% area.
2. Price seems to bounce at the 50% area of the lower portion of the rally too.
3. Price makes it to the 50% area and exceeds it slightly.
4. Failure of price to maintain that price area and then falls to the 50% area.
5. Hesitation around the 50% area where price dipped just prior to the open.
6. Price just blows through the overnight swing low.
7. Little bit of hesitation, but price keeps dropping.
8. Popped through previous swing low and then hesitated some with some pullback.
9. Quite a bit of pullback after the 1/9 PDL was breached. However, there’d been so little pullback or pauses in over 30 points. Plus, the pullback did not exceed the most recent swing high.
10. Less hesitation on 2nd pass through the 1/9 PDL.
11. Starting to spend more time in sideways movement than downward movement. But again - after 40ish points, it would be time to settle a bit.
12. Still not done. Price keeps motoring down, but pulls back sooner.
13. Some overlap in the price bars - buyers and sellers are starting to settle in on finding value.
14. Movement has settled down a bit. Definite pullback rather than just sideways movement.
15. Price seeming to move more easily up and is struggling to move lower.
16. Hesitation prior to and then a pop up through the last swing high, but immediately fails and drops below that area.
17. Price makes some progress lower, but can’t reach the previously established LL and starts to head back up towards the LSH that was breached a few minutes ago.
18. Hesitation again prior to a blast up to 72.

Nice movement. This shows me (YET AGAIN) that sensing failures around important areas (highs, lows, 50%) is key.

 

Replay for 1/13… From late morning to when the NY hours ended the previous day (1/12), price had been moving in a range. Overnight the range got tighter, but price mostly hung around the mean of that range. Around 0500, price exited the range to the top, pulled back inside the range and then exited again to the top with a HH at around 0700.

1. After the overnight high had been established, price found it’s way back into the range. For the 2nd time, price is making its way outside the range.
2. HH followed by a HL.
3. ON high confirmed.
4. Price hung out for a bit and then made a new HH, but just under and area yesterday that was popular. More HHs and HLs.
5. At the NY open, price surged through the area that was troublesome yesterday.
6. Pause with some pullback.
7. Thrust through the PDH.
8. Test of the PDH area again.
9. Another HH made, but the retrace within the one minute is quite apparent.
10. And another HH, but the time spent in sideways/pullback movement is greater than upward movement.
11. Pullback just barely makes more progress, but let’s see if another HH will occur. 32-28 is a popular range right now.
12. The upward movement seems to be stalling. The amount of area covered in a one-minute time period is also reduced. Price isn’t going down, but it isn’t going up either.
13. HH does finally occur.
14. Swing low area breached a bit though in a semi-sideways manner. Can price be pushed back up again?
15. Making another push, but can’t seem to meet or exceed the previous high.
16. 2nd attempt to meet/exceed previous HH and it doesn’t happen. Still largely going sideways though with the lows not going lower than the past swing low. Will price pop/spring up?
17. Just sort of hanging out in sideways land. Will something happen soon??
18. Inching down, but not before another pop up. Nope - can’t get to 4245.

This was a test of patience. Had I been holding a long, there would be temptation to exit, but there weren't any glaring reasons to do so. Yes - a DL would have been broken. However, price wasn't going down. It wasn't going much of anywhere. Equilibrium had been found and buyers and sellers were comfortable.

Looking at what followed that afternoon YET AGAIN illustrates the value of recognizing ranges and the high, low and mean of it. 4242 was passed through 2 times and tested 4 additional times (pink dots) before the subsequent down move really took off.