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I believe the same thing, just sell orders is what we see at the "Nice resistance" level. The sell orders left behind in late October early November were chewed through the three different days price got to that range in early to mid January. Sooo, when price got there Friday there were not many sell orders left so price rocketed up through the resistance line N.c drew on the chart.
If hind sight was foresight we would all be rich right...LOL So what good was all the above crap i just wrote right? Well if i am even in the ball park in what i presented then there is some information that will point us to what may happen in the future. Let me start with that big daily candle left behind on Friday. If you look at the same thing on like a 30 minute chart you will see that price gaped up considerably from previous close. That would mean there was a considerable quantity of buy orders there at the time and a safe bet is that if price gets back there they will still be some unfilled buy orders to cause a bounce again. A bounce you could profit from. Now looking at a 30m chart again Friday on the open price gaped 50 cents and shot up another buck all in just a single 30 minute candle. After which it spent the remainder of the day in consolidation. The consolidation is the matching of buy and sell orders at that price range. Which stack is bigger buy orders or sell orders? Who knows at the moment? No one but the person or computer that has the orders.
What good does that do us? Well the chart will tell on itself in just a matter of time. Sniper, you should see where im going with this judging by your handle. If we are patient the chart will tip its hand to us and show its cards. Just like it did in all the instances i referred to in the first paragraph and that the chart clearly shows. There is no way for a screen trader to see the real orders but if you are patient one can quite handily figure out where they are at most of the time...i think.
How? Look for significant moves in price such as late September and early November and Friday. Then back track to their origin? Was there a consolidation? If yes then there were some buy or sell orders that didn't get filled and historically each time price returned to that price range there was a bounce. Typically called pivots. Price pivoted for a reason. The reason was left over buy or sell orders. Thing about the new highs is we as screen traders cant see anything yet. But in the case of the consolidation printed on smaller time frame charts Friday if price falls from there it means there were more sell orders than buy orders and of course if price breaks higher there were more buy orders there.
So N.c could very well be correct even if not near term he could be eventually. But on the other hand so could sniper. The unspoken key i think is what we don't see and is not in any of our trading books. Its not fundamentals, its not indicators. There are really three kinds of traders, maybe two. There is us and there are banks/institutions that feed on us (them). Then there is the occasional wealthy individual. Those consolidations are them and their huge orders being filled and everything else is us filling those orders and reacting to the breakouts and i think here lies our mistake. I used to tell my wife i think i would be right nearly every time if i would just turn my charts upside down. I really believed that and i may have been unwittingly correct because statistics say 95% of us are wrong and loose money at this venture. If most of us are wrong then most of them are right. All that stuff in those books and all those opinions...they are right and lucky sometimes but i have read a fortune in books and none of them have ever been any where near consistent and most of their ideas of money management make no since at all. N.c points out a nice resistance line but what about the support line at the bottom of the range. It got broken only to shoot right up through the resistance.
My question is not a challenge by any means. My question is a big fat why??? Why did price bounce back and forth between that support and resistance. The support and resistance is in every book i have ever read and it is useless without the why i argue. Why did Sniper call out a bull trap? Likely because it did the same thing below at support. Again Why my friends? Why did it happen? If we know the why then we can join the 5% of us we never hear about that actually beat the them's.
Anyone care to enlighten me?
thanks for your time gentlemen
“As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.” Ralph Waldo Emerson