The ten mile high view for an overall look at how this commodity is going and near term we see price failing to make new highs and a sharp sell off last week. The green line is my 100 Dollar favorite which Russia likes to see as the price they need to best earn a crust. Or so they like to tell us.
What is plain to see is the lack of pro money buyers taking it higher. Ask your brain a logical question, if pro money were to buy, where on the chart is a place where they have been active before and how close is it to current price that may effect how price will move. This can result in spikes and rapid moves if pro money doesnt have to trade against itself for very long and can take the heat.
It takes a lot of money to stop and turn a moving market, LOTS of money, and that is hard to hide.
Another weekly chart with some new info marked up. The orange line is the nearest resistance we have seen of late and showing some interesting price history. We may see a range develop from this and it would be a good place to see one become established. On the bottom of the chart is a grey box showing the last place where clear buying from pro money came in, this is marked with an up arrow. This was later tested with the tick mark and is no longer full of bullish orders as it once was. There is no point in guessing if it will cause price to rise again until we get there. Leave speculation to Gamblers.
Daily chart.
Closer on the current price and see how even a brief rise above the orange line was enough to see a strong move away. Not far below is 100 dollars and how I would like to see that be broken in grand style. It would setup some good room for profit below. The lowest orange line is the most attractive area for the bears if they can grow a pair and run with this.
Last up is the 4hr chart.
I put in a combination of longer and shorter term annotations on this chart. On top we can see the retest and the sell off, lower down is a black line where near term demand on the left was broken and turned supply. Hardly a positive sign of pro bulls being interested in taking this any time soon.
Price is rapidly approaching 100 dollars, and you will know by now how I feel about price rapidly approaching an area. It can be friend or foe. Mainly its a good trick for herding and playing with emotions.
Note the green line and where price broken through, came back to test if it would hold and continued up, classic move and makes money if you were there at the time. Imagine if these happened all the time on all time frames.........they mostly do. But the noise of the market clouds most peoples eye.
The last item is the little grey box where a battle took place and the bulls won. It is not a place I would expect major buying next time given the proximity of 100 Dollars and the lack of good targets. And as always, wait for price to reach the area and tell you what the intentions are of pro money.
Hi Doc, Thanks for taking the time to share your thoughts...much appreciated. BTW ...are you a medical doc?
ReplyDeletedoc kim
Hi Kim,
ReplyDeleteYou are welcome.
The best medical advice I can give is as a trading Doctor. Take a sip of you of your favourite beverage, relaxe and call me in the morning if the trade has not worked out.
Oh, and be sure to have a stop set.
haha...i might be calling you every morning. I always have a set stop though. I only work part time now...the rest of the week i am endeavoring to master this trading business. You have caused me to look at charts and to think in a different way. Not easy to change your thinking and perceptions.
ReplyDeleteI would really twist your mind if I told you pro money buy as price falls and sell as it rises. Retail traders just dont get the bigger picture and think price turns only due to a flood of new orders in the other direction.
ReplyDeleteJust keep in mind, it takes money to turn the market, lots of it. Sometimes it takes a while to unwind, whereas other times it will rocket away, the latter is not that common.
I covered this before, but the media in general and all the material sold on trading is to my mind, designed to get your money in the market at the wrong time. It doesnt make sense when you really watch price move....it is the lead up to the move is where the real action is and the move away is the reaction.
Take slow and deliberate analysis and it time it gets easier to see what is going on.
I would really twist your mind if I told you pro money buy as price falls and sell as it rises.
Deleteyes..i understand that now. I have been a student of rtm and ag for some time now, but at times i feel as if i am studying a tree and missing the forest. I am now trying to look at the very large time frames and working down from there- just as you do.
hi Doc,
DeleteI am suffering from confusion.You previously mentioned that wicks of a candle represents fear/greed of retail traders,if so why do we consider engulf of a key level by a wick to mean a test by pro money before procceding in the direction of the engulf?
I dislike the word engulf and I would only use it on a candle be candle basis. The idea is to show that a recent price has been completely reversed and with a great deal of power on the next candle. We all have our ways of looking at it.
ReplyDeleteThe wicks I see as important are when price is reach a previous area of supply. The wicks show weakening buying and selling pressure coming in. Taking a trade based on nothing but a hit into this area is risky, I want to see more conviction than that and knowing full well that a false move could be in the making. Missing out on a few points is better than being completely wrong and trading in the wrong direction.
Excuse the typos today, I have a lot to get done before end of day.
ReplyDeleteDoc, I´ve got a few requests, I´ll write them in here if I may. You see I´ ve recently discovered I don´t really know when not to trade, if that makes sense.
DeleteWhen trading price (as compared to indicators, or some kind of system where either the conditions are met or not) one can sometimes sort of force a trade because you can always look for important areas and higher lowes of lower highs, even tough they´re not as good. Can you post something that you consider messy price ation and you´d stay away from?
I know you want to see clear areas and clean price action, but sometimes in real time it´s not that easy.
Also, isn´t there a moment in time when price can go either way according to our definition of trend. ecause sometimes you have i.e. higher lows but lower highs at the same time (meaning stay away if not clear?)
Last point. When looking for i.e. higher lows before entry you would always take the entry from a lower time frame? So if there were a daily demand area you would never take the entry of the daily, right? Because, maybe bad entry and also that would distord our perception of trend according to the definition? Does that make sense?
Thank you in advance, looking forward to any replies/posts.
Hi Doc, What opinion you have in NZDUSD?It is at month high now.
ReplyDeleteLooking back through time I notice a sell off back at the end of July 2011. I also see a slow down in the current bullish move for the past three weeks. This week is likely to end the first lower priced week in over a month. While it is too early to say short it, I would watch closely for lower time frame price action on a daily candle close for a while.
ReplyDeletePrice is not only on historic highs of 2011, but its also at the top of a trading range and breaking out of those and trading he break is bad news. It is better to wait for the clear direction to be established and have pro money ahead of you.
Hey Doc,
ReplyDeleteI have a vital question about your thought process behind placing SR lines on your chart. From what I have studied from your past writings (and that is a LOT) pretty much all of your analysis, trade entries, and targets center around flip/SR areas. I completely understand the logic of this (trade where pro money has proven to be active) but it is the actual act of drawing the SR line itself that has been a struggle for me to say the least. It seams every few weeks or so, I will have a paradigm shift on exactly how and where I should draw these lines. So my question to you is, what is exactly the fulcrum of your though process when you draw an SR line on your chart. Does your eye go up/ down to the next supply or demand area/ decision point and look for the best fitting history from the bulls and bears in that zone for the SR line (which is my current though process when drawing SR)? Or do you simply look for the source of the last opposing move (ie If you were looking for a bullish sentiment change, look back in history for the last bullish decision point and wait for a close above that line for your bias confirmation...)? Or is there some other rule of thumb you use when drawing these lines? Also other SR questions arise such as if you get a close above an SR line, can the retest produce a close back below to pick up more bullish orders or does that invalidate the bullish trend etc... I know you say these are just 'areas' and not precise lines, but since you actually take your signals from closes above and below a single data point on the chart I figure small variances in SR line placement can produce a lot of false signals if you are off by even a little. Maybe if you could fashion this SR though process into a blog post it could clear up a lot of confusion here. Thanks and I hope all is well with you!
Hi Howard,
ReplyDeleteCommonality means a lot to me in how I approach applying logic to various levels. As we go up to high time frames there will be less levels to mark, but when we do mark them the effect price shows when getting back there will be great.
If in doubt, always zoom out to my ten mile high method and things get a lot clearer. If you find there is trouble in getting some S/R areas marked, then it means they are not clear enough to be worth more of your time fighting to see through the noise.
What I want to find are as you pointed out, where has pro money active in the past and what was the chosen direction at the time, and also, was it a continuation of a higher time frame move or has a level been broken and sentiment changed. This tells us a lot about the direction price is likely to take longer term and at least to the next old S or R area.
I moved to a web based platform and still getting to grips with it. I see some good and some poor features in it. I will try and get some new charts up when I can, but this new platform is not good for putting comments on. I have to find some means of marking the charts once I take an image of them. Given that my graphic skills are as useful as a screen door on a submarine, it is best not to expect Hollywood quality images soon.
All well here and enjoying time outdoors lately and taking long term trading positions.
Thanks! BTW Have you ever tried some of the free annotation software that's available online? I personally use jet screenshot when I mark up charts for my record keeping. Its not as straight forward/ intuitive as marking up the chart directly from the terminal itself but it gets the job done..
ReplyDelete