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Price Volume Analysis Trading with the Essentials

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  #11 (permalink)  
Old 10-06-2009, 09:30 PM
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Originally Posted by the tape View Post
One of the best and safest ways to trade is to bet on continuation. When we are trading the continuation, we are automatically trading in the direction of the current trend. The most imp thing in betting on continuation is to identify a strong move, a rally. When we see the price moving in a particular direction of say 1-2% intraday, its not necessary that it is a rally. It can be an impulsive up move or a buying climax.

Below is a chart which is a perfect example of difference between a rally and non-rally move.

The up move in green is of about 35 rs, its a big move but its not a rally.

The down move in red is half of the big green move but, its a rally.

The difference between the two is:

The movement in a rally is more time consuming and the price looks like moving in a rhythm. Each bar seems to be making a new low and more importantly the close ( the settlement ) is at lower and lower price. ( in case of downtrend )

Another example of a rally move and non rally move is marked by second green and second red. See the price traveled the same distance in 20 mins that it traveled in 5 mins in that up move. What happened next is visible. The more time it takes, the more strength it carries.



I will post many charts showing the difference between a rally and a non rally move. Once you begin to recognize a rally correctly, you will have a clear idea about which continuation to bet on and what to ignore ( false moves and traps ) . then we can move on to develop a setup to trade the same.

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Old 10-06-2009, 09:58 PM
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Originally Posted by Mephistophilis View Post
Please right more on trends and trend continuations. and dont forget to attach chart as examples.

now here is what i see in dlf at eod





and yes, always easily done at eod.
posted a chart in my journal about today's trade in dlf. would like to hear from you

thank you

mephistophilis, even the most amazing and reliable formations fail everyday only because they appear after the primary action has taken place and most people fall prey to them because they don't understand when it happened and what it was. if the bigger participation comes in, the formation that takes place first are also trapped sometimes.

it is normal that you want to understand the reason behind every move but it is up to you to decide whether you want to learn candlesticks and volume to the core or you want to become profitable. to become profitable you need to find one thing that works and then repeat, repeat and repeat.

the action in dlf chart is beyond my understanding. the reasons i have explained earlier, bears took the initiative so either i would trade it for downside or not trade at all.

i am no one to tell you about what's happening in every move because i simply don't know myself. whatever doubts you have, ask the chart in front of you. only that chart can give you the answers

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Old 10-06-2009, 10:00 PM
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Originally Posted by the tape View Post
it is up to you to decide whether you want to learn candlesticks and volume to the core or you want to become profitable. to become profitable you need to find one thing that works and then repeat, repeat and repeat.

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Old 10-06-2009, 10:15 PM
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6 up ticks first thing in the morning. notice the size of all 6 bars is almost similar. perfect example of a strong rally. buying happened for 30 mins.

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Old 12-06-2009, 11:08 PM
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One thing i would like to share that i have noticed while observing thousands of 5min intraday charts.

the opening range of 1st bar acts as the most crucial support and resistance after the open. whenever price breaks out of the opening range ( strongly or weakly is the latter part ), imo it has a major influence on price movement, sometimes even throughout the whole day.

whenever we see a wide range opening bar, no matter how bearish or bullish the formations may seem, we should avoid trading it before it breaks out of the opening range on either side ( talking strictly about 5min timeframe ) because what i have noticed is, until the price breaks out of the opening range, the right side is not clear and till the right side is not clear, the wild movements in price are not shakeouts but genunie indecision.

On the other hand whenever you find a stock that breaks out of the opening range within first few bars ( preferably all the bars should be equal sized ), there are more probabilities of that stock giving a directional move for the day.

below is the example of such an action that shows the importance of opening range.

All major formations in this chart while opening are highly bearish. first bar is big bearish bar and the price consolidated in the lower half of the bearish bar for more than an hour. there's another bearish bar and price again consolidated in it's lower half for 50 mins. only bears are active in this action. the yellow line is the low of opening bar and as we can see it is not broken. what happened next ? poor bears did'nt even get a chance to get out. no signals of failure are visible for bears so that they can cover the positions. this is what happens when we get in before the direction ( right side )is decided.

the bearishness of the morning formations is visible in what happened in later day. it was so bearish that the price came down all the way ( 7% ) to close near the bearish formations.

moral of the story is: we should always wait for the chart to show us the right direction in form of the opening range breakout. reading the successful breakout or failure is next thing but atleast we know it's not sideways.



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Old 13-06-2009, 12:19 AM
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Originally Posted by the tape View Post
One thing i would like to share that i have noticed while observing thousands of 5min intraday charts.

the opening range of 1st bar acts as the most crucial support and resistance after the open. whenever price breaks out of the opening range ( strongly or weakly is the latter part ), imo it has a major influence on price movement, sometimes even throughout the whole day.

whenever we see a wide range opening bar, no matter how bearish or bullish the formations may seem, we should avoid trading it before it breaks out of the opening range on either side ( talking strictly about 5min timeframe ) because what i have noticed is, until the price breaks out of the opening range, the right side is not clear and till the right side is not clear, the wild movements in price are not shakeouts but genunie indecision.

On the other hand whenever you find a stock that breaks out of the opening range within first few bars ( preferably all the bars should be equal sized ), there are more probabilities of that stock giving a directional move for the day.

below is the example of such an action that shows the importance of opening range.

All major formations in this chart while opening are highly bearish. first bar is big bearish bar and the price consolidated in the lower half of the bearish bar for more than an hour. there's another bearish bar and price again consolidated in it's lower half for 50 mins. only bears are active in this action. the yellow line is the low of opening bar and as we can see it is not broken. what happened next ? poor bears did'nt even get a chance to get out. no signals of failure are visible for bears so that they can cover the positions. this is what happens when we get in before the direction ( right side )is decided.

the bearishness of the morning formations is visible in what happened in later day. it was so bearish that the price came down all the way ( 7% ) to close near the bearish formations.

moral of the story is: we should always wait for the chart to show us the right direction in form of the opening range breakout. reading the successful breakout or failure is next thing but atleast we know it's not sideways.

the tape -- you are absolutely right. John F Clayburg in his book"Four Steps to Trading success" has a chapter dedicated to that subject.
He calls it DDF --Daily Directional Filter.


download link.
http://www.4shared.com/file/11141732...g_John_F_.html

Some reviews of the book at amazon site
http://www.amazon.com/Four-Steps-Tra...4828851&sr=1-1

Last edited by Shrees; 13-06-2009 at 12:25 AM.
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Old 13-06-2009, 12:37 AM
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Originally Posted by shiree View Post
the tape -- you are absolutely right. John F Clayburg in his book"Four Steps to Trading success" has a chapter dedicated to that subject.
He calls it DDF --Daily Directional Filter.


download link.
http://www.4shared.com/file/11141732...g_John_F_.html

Some reviews of the book at amazon site
http://www.amazon.com/Four-Steps-Tra...4828851&sr=1-1

http://www.inditraders.com/showpost....&postcount=159

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Old 13-06-2009, 01:59 AM
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JJ Sir you always are many steps ahead of us.

Last edited by Shrees; 13-06-2009 at 09:22 AM.
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Old 13-06-2009, 02:36 AM
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Shiree ji, book posted is in format djvu.....
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Old 13-06-2009, 08:03 AM
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Originally Posted by devdas View Post
Shiree ji, book posted is in format djvu.....

djvu viewer is a free software. Download it and install it. You can read the djvu files/books.

Download link is

http://www.celartem.com/en/download/djvu.asp

I hope this helps
With warm regards
R. S. Iyer
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