Buyers stepped on the previous candle which is also in long term support. Any move lower would be incredibly difficult to retain as a bullish intention due to the unwind there has been and the power of professional money will show its face here real soon. The setup for plenty long action is slowly coming in and this is no more than a heads up for the moment.
I should point out the two lines are once again support and target with around 730 points of potential profit if patience is within you. At this point I have to also point out that the information given in all of this blog is for educational use only, any trading taken off this is your sole responsibility.
Ok, the legal guy has now left the building and its back to regular programming.
Even though there is in the region of 730 points available, there is likely to be more than 1000 points of profit once you get to grips with trading in the foot steps of pro money, dont forget there will be pull backs, fake moves and all sorts of tricks to get you out.
Lets move on to the daily.
Now we are into what most serious day traders look at, closed daily candles. And in case I have not mentioned this before, you only ever trade off a closed candle no matter what time frame you chose. Burn this into your brain and Do NOT ever take a chance because the last few seconds of a candle can rapidly change its meaning and intent, and in particular when it is forming in an interesting area.
The lower line is support where we saw buyers coming in. What else do you see, hint, use your eyes first and then engage logical brain. Do not make the move out to be what its not i.e what you think it is. Trade logically and trade reality. If I sound like my teachers hat is firmly in place today you would be correct dear Sir/Madam.
What I see is price has move away cleanly from support indicating a good quality of buying. The pull backs I see are small and no interest from the bears indicating pro shorts have not come in. I also see the most recent bearish sources being taken out/broken and more indication of a tiring overall bearish move.
The 4hr chart is up next.
This is pretty much as close as I get you into current price without loosing a lot of important detail. Going to the 1hr and lower means you need to send me 1000 bucks on Paypal for a signals service. I jest, you need to learn this stuff for yourself.
In keeping with simple charts and building analysis up in layers we now have a close up view of price action. A term new to some of you and yet another buzz word you need to become aware off. All it means is we look at how the candles form in respect of the intended direction, and in this instance it is bullish. And being kind to the new people viewing this, bullish means buying and bearish means selling.
On this 4hr chart does anything look interesting?...no?....look once again with your eyes and logical brain switched on. I find a reduction in the consumption of Whiskey/Brandy and lack of dancing girls really useful in aiding concentration of price charts.
What I see is the clearest sign yet of bearish moves being over taken and no further bears coming in, if there is no selling there has to be buying. If price is going up, there has to be buying. If there is no buying or selling price moves side ways in a successively smaller and tighter range.
Price does not move side ways, numerical value as shown as price is either up or down. Get this side ways nonsense out of your mind or it will drive you nuts. Use logic, use common sense, employ factual gathering of valid information that is proven to work. This you will learn over time.
Note the solitary red up arrow. A battle ensued here with both bulls and bears slugging it out. Why?...check the daily chart for the answer. If you can spot it, post in a comment. One other nice thing I like about this chart is the amount of clear air I have away from the bearish move down. I am far away from the mess and with everyone in bearish mode still, it is a good time for pro money to be positioning for what retail traders wont even think about for a long time yet. There is ample room even for modest profits up to the marked grey box. Or if less aggressive, to the arrow where they will be a reaction.
And with a gun planted firmly at ones temple, do you go long, short or stay out?
Yes I know its a dramatic statement but its done to capture your imagination, dont take it seriously, get used to my humor or be forever lost.
I would wait for a pull back to close to 20, we are close at the moment but there is no buying yet. Before price rises pro money must absorb all other bearish orders into which they hide their bullish orders and do it in such a way that you cannot see what they are doing. Yes, very smart.
Red arrow....Old demand...Vogon
ReplyDeleteRed arrow, hard and fast buying&selling on both side, pro money's trick game at old demand area, clearing out all retail traders, and fill pro's real intent orders for continue falling.
ReplyDeleteThere's a name for this type of candle, "high-sth (u've talked about it but i forgot the name)".
blacky
blacky, if i remember correctly should be an "high wave candle"; for the sake of newcomers we should remember that the "meaning" of a candle [and the pa that rapresent] depends a lot about the location of a candle [in a clear S/D zones, above belowe S/R in the middle of nothing etc etc] and the time in which it is printed [during which session ? at the opening or the close of a session ? in the dead time between the NY close and the TY opening ? and so on], but you already know this ;)
ReplyDeleteThank u, whiteout, thats the name!
DeleteYup, the name is relevantless, the meaning/true intent behind it is KEY.
blacky
I think it is within the first red bar after the doji and bullish bar at 21.88 level after which the decent to 19.00 followed. After the bullsih attemp the decision on/after this bar was to go down? Would anyone enter after the close of this red outside bar?
ReplyDeleteIn my opinion, there are two ways for entry:
Delete1. scaling in short
2. wait for the pullack. If u check H4 chart, a pullback appeared next day at the upper H4 supply level. If u check lower TFs, more detail can confirm (showing) the pro's selling occur again.
It's about chart reading, read psychology & behaviour behind candles.
Don't be frustrated if u dont understand it now. It's indeed required AMOUNT of time to absorb the wisdom and master it.
Screen time is ur best friend:)
blacky
Thanks doc for you wonderfull post!
ReplyDeleteAt the red arrow, I see that the area has been strong support in the past. When price approached it, price was "compressing" down but the cp looks was just pro money accumulating orders into the market, we saw 6 days of small candles consolidating, yet no higher close and no intrest to take it up. And then price diped one last time into old demand and bounced a bit up, yet the close of that daily candle was still lower than the previous one. And finally, the "swap" happened, no intrest for longs anymore and price could fall easily.
Mel
Well i see price had a daily close above resistance (around 20.257)and is now grinding down testing the level, it may go down till 20.100 zone where is a h4 decision, and a good place to look for longs.
ReplyDeleteHi Doctor,
ReplyDeleteVery excellent blog. Thanks very much. One think you said about close of the candle is somewhat confusing for me for long time. My logical side of the brain starts to tell me, closing is a function of TF. One TF it closes but another TF it is a wick. And also where is the daily close in this 24 Hr market. It varies broker to broker and the time zones they are in. Do you define a session close?.why the daily close is logically powerful?.
Hope i didn't ask some stupid question. But these questions are in my mind for long time.
Thanks doctor for your effort.
Rishi
A major market close are the better candles to read, London being the best because it trades more money than any other market and has been the hub of world finance for many years. The broker you use may not have sufficient resources for quality data, the larger brokers tend to be better. Compare a few until you find a good one.
ReplyDeleteThe day close is where most traders look for direction. It holds true for all classes and fund size. Once direction is know, then they wait for the right opportunity to get in. It is rather simple, because it is.
Hi Doctor,
ReplyDeleteThanks very much. Silver currently falling like a rock . No bullish move yet.
Silver has been heavily bearish and it takes time for the large funds to unwind and load up long, if that will be how they play it. We wont know for sure until we see some signs telling us. For the moment what I see is price forming a narrow range with more interest been taken from the bottom of the range. Any fall from here would likely test the early December low.
ReplyDeleteAlso keep in mind we are in silly season where major funds close out and new positions taken for long periods of time. The real test will come when the last bearish move is tested to see will more short orders come in. Keep in mind the big picture, we saw a bullish move in a strong bear market. How much money do you think it takes to completely soak up that kind of money against you and how much more did you need to reverse that move, that is some serious cash at work.
Think of all the stops that were taken and note the S/R is sets up. Also look for follow through, there is neither long or shorts taking this anywhere just yet. Patience will be your best friend now, so wait.
Doctor,
ReplyDeleteJust out of curiosity , i went through all of your material. I have seen you only mark supply demand zones as rally base drop or drob base rally. You might have noticed that we most of the time mark rally base rally and drop base drop also. Often i found price turned at these zones as well. For example. we can expect price to turn at 21.88, 20.84 from your above chart. May i know the reason why you never chose RBR, DBD type of zones?.