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The S&P Chronicles - An Amalgamation of Wyckoff, VSA and Price Action
Excellent question and good observations, I can tell you are familiar with the methodology;
Technically Bar C is a down bar, however it is regarded as no demand as it attempted to break the highs (which we can see from the spread). I was careful not to use the term ''no demand bar'' as this is VSA (an up bar with lower volume than the previous 2 bars).
It pays to step back and take a macro view of the market, soften the lens a little; what do we see? Very high volume supply bar to the left (Z) an attempt to break at B, another revisit via C, which has the lowest volume on the chart (US session) demand volume is declining. It's an instant short via the close, odds highly favour that the amount of buying force via C is unable to break the through the supply via Z (both highlighted purple)
Bar C is not a test bar, because we have no sign of strength bar behind us, these generally occur at support (within reason) bottom reversals, spring bars etc.
Entries are discretionary; short the close, the low, 2 bar previous low or alternatively wait for confirmation, although we always pay for confirmation....either in price or we miss the trade entirely. The trade you placed was excellent; we all have varying degrees of experience, account size, chart reading ability etc. Well done
Bear in mind that the market after a no demand setup like this via a daily time frame, would need to be triggered earlier rather than later due to stop placement (risk in points is very large)
All the best,
F
Can you help answer these questions from other members on NexusFi?
hi
2d and 3d bars before big G drop on 5 min ES are "no supply," bars. I took a long position at the 2D bar before G. It was a simulation. (Thank God) How can you hold 2/3 of your position in this situation? "Low volume" situation - you know this after or at the bar G. How did you know it will not retest C level?
This raises a VERY important topic that many new traders to this methodology appear to have in common.
They tend to ignore THE BACKGROUND CONDITIONS (all the action to the left) and focus on one bar to the right handside of the chart.
We always tell a Wyckoffian story of strength or weakness for our setups; the story here is weakness (as illustrated). The bars you have mentioned, do have low volume, however this isn't ''no supply'' there is no sign of strength behind us. Sellers are in control and do not need to prove themselves. The original breakdown bar at Z is supply, revisits via B (mini climax), again with even lower volume at C, which is no demand. As we react via E, volume increases (confirms the presence of supply)
Its the buyers that need to prove themselves. As we try to rally from the lows via the E wave, its weak; volume depletes, narrow spreads etc. Stop was moved after E to 1 tick below my entry to cover commissions (as mentioned)
Holding this trade was relatively comfortable as partial profits were locked in via D and the stop was moved to cover costs after E. Plus reading the market as it unfolded, did not show ANY STRENGTH. Even the mini pop in volume that closes back under resistance via F, was additional confirmation of weakness. You could short here; but not long. Use the comparative and relative analysis of the waves and price bars within
Taking a long position, in the middle of the trading range is contextually incorrect. Try to use structure to lean against - reduces risk
Good question; make sure you use structure, understand the backgrounds conditions and use context
This is probably the best explanation that teacher would give to a student like myself. Thank you. "Background" is still something subjective to me, something I can't quantify therefore I can't totally rely on.
Like today (30/Jan.) do you look at the big overnight drop as a background? I think yes even though the overnight volume is miniscule. Also mid-day volume in futures is normally down. But you always consider this mid-day volume as a comparable and functionally equal volume to open hours volume and last hours volume (highest). I mean that there are cyclical factors that effecting volume. Don't you think? Yes I remember - everything should be looked in context and within structure. Seems to have a better vision of this structure and context we need some indicators like volume factored indicators, say, Chaikin money flow and stochastic which adds feeling of momentum and waves. Recently I use also "relative volume". They just help to read the market and to create " analysis- paralysis." Your lessons teach to see more to the story.
Hi @Feibel,
cannot just hit the thanks button.
It's a long time, many years in the business and, have to recognise, I've been not that aware of the forum. So just found your corner 5 days ago. Went through the majority of your pdf chronicles. And now looking forward for the daily new one.
Amazing. Professional work.
I've been subscribed to the Weis's "stock market updates" daily reports, wich I find very interesting. Kind of little gems of ideas on each.
But your chronicles embrace much more detail and explanation which I enjoy going through and help me understand and improve my chart reading capabilities.
Just out of curiosity: how much time do you devote daily to trading? and how much only for the chronicle pdf?
Would you recommend which books or videos to deep into this market reading technique?
Thanks a lot for sharing your work and your enthusiasm keeping up this thread.
Wish you the best.
David
Active trading is anything between 7 and 12 hours a day (dependent on swing trading portfolio) The S&P Chronicles does include much prep for myself along with other forms of self development, all in all anything between 150m to 240m per edition. Hence the uploads have been reduced of late due to the arrival of our new little addition to the family
The go to books are Studies in Tape Reading by Rollo Tape, a pseudo name for Wyckoff (I would always start with original source). A deemed to be modern classic, Trades About to Happen by David Weis and for VSA The Undeclared Secrets of the Stock Market by the late Tom Williams. All excellent books.
Wyckoff and VSA principles at play in today's action:
Apex (setup)
No supply
New momentum low (setup)
Spring (setup)
Multiple time frames
Bar by Bar Analysis
No demand (setup) Reverse use of Trendline
Structure
Waves Absorption
Effort vs. Result
About half way through Friday there was an impressive rally (on both tick and 5 min), with a good wave volume, I was thinking we may have a COB. The previous downtrend was weak and messy, so why not..
I was proven wrong, so my question is... when is it a COB... Thinking as I write, I suppose its when the reaction doesn't go much further than 50% of the rally. But it was a good looking rally.
I didn't consider a Long, as the higher time frames were heavy downwards, so I'd want more proof, but it made me sit back...
As always, thanks for the excellent Chronicles...
PS: On the 5 min chart... to the left of the rally, as it breaks down thro the green line... is that a form if distribution ... similar to the type of accumulation you (Feibel) explained a couple of weeks ago. drag the buyers in but each bar closes near its Low
