Trouble interpreting price/volume/support/resistance

Discussion in 'Technical Analysis' started by abxs, Jul 28, 2006.

  1. abxs


    I'm trying very hard to understand the relationships that move the market. Based on essentials like support and resistance I try to determine a direction of the trend. Price is the main element I focus on, using volume to support my hypotheses.

    Unfortunately it doesn't really seem to work out, I've been trying at this for a couple of months now and each time I think I got/see something and implement it after backtesting, it just doesn't seem to work.

    Anybody who uses similar methodology and can give his or her opinion please? I'm trying to look at this from other perspectives but don't know what I'm missing or doing wrong here.

    Attached you find a first chart where I noted my entry point.
  2. abxs


    here I thought the signal was very clear...
  3. abxs


    I also base my system on triangles, they don't occur that often, but when then do I believe there's a good chance for substantial profit as big moves are often to follow (imho)
  4. abxs


    what do you make of this?
  5. abxs


    I thought this one was a clear double bottom?! perhaps a W shaking out but nevertheless I believed it was going up. Which it did... but then turned back again so I was stopped out...

    I look forward to hearing any comments.
    I'm really getting desperate here.

    I'm trying not to make the "common" mistakes like:
    -> being emotional
    -> overtrading
    -> not following your system
    -> not taking a loss

    In fact, I'm taking every loss and try to stay cool with it. But the losses have accumulated to a high which is getting very hard to digest...
  6. hcour

    hcour Guest

    Well, hindsight is 20/20 but on your first chart, the bar preceding your entry bar was a wide spread down-bar closing on the low. This was preceded by a 3 bar rally, the first 2 very narrow spreads on very low vol and the 3rd a wide-spread bar closing on the low ("gravestone-doji"). All this was preceded by a double-top which broke your trendline, then the reaction that followed was mostly wide-spread down-bars on strong relative volume and rallies on narrow-spreads and low vol.

    So the pv action following that double-top was not exactly positive.

  7. BKuerbs


    I don't see where you entered?

    This is my interpretation of the chart and, of course, it is very easy using hindsight.


    Bernd Kuerbs
  8. billp


    Not sure why I'm replying to you as I'm learning myself but hopefully you can use the below information to help you.

    Chart 2:
    I wil never sell the stock at that level. Why? Its in an uptrend--higher lows and higher highs. Unless you have some additional information to tip you to sell the stock, you should not sell the stock at that level. The candlestick spattern that with the topping tails are not enough for you to short the stock unless you plan on scalping it and have other expertise. The topping tails is just 1 possible hint that that may be the top. However, it may not be true as in this case

    Other charts
    You ask questions as to why target profit is not achieved or why the direction you are hoping for did not materialise.
    Answer: There is resistance/support overhead. For eg in your last chart, there was a previous support that turned out to be the resistance. That's why your target was not achieved

    Hope this helps
  9. abxs


    I agree, of course hindsight analysis is always right. Nevertheless you argue that there are bars that try to go up on very low volume (imo: just a faint profit taking). Indeed, I would expect a further down move after that. But then it reaches support line. I'd enter at a support line the 2nd or 3rd (not 4th time) because:

    -> first time it hit support it turn away fast and on high volume

    -> it also went down on wide range bodies

    Do you use similar strategies as for a methodology?

  10. abxs


    Indeed, the second top is noticed by a lower volume. But what's making me confused is that there are so many ways to interpret this... like after the first top it didn't hit the supoprt line any more. for me: a strong signal, right?

    Then it reached the second top climbing on low volume. For me: another sign of strength because it got eacher with almost no effort which suggests no supply...

    Your entry point would have worked fine indeed, I'm trying to enter only at the outer edges of ranges/channels, I am trying to hard at a perfect entry or what?

    #10     Jul 28, 2006