[Frantz Herr]

Oil testing axis line support on diminishing Supply…

[Z1839]

<p style=”text-align: left;”>Sorry if this is an elementary question, but is the diminishing supply indicated by the falling volume ?</p>
I tend to get too caught up in the volume bar colors and think that the red volume bars coorelate with supply

[skoutasg]

Z1839:  The chart which you reference connotes falling volume or in Wyckoffian terms falling supply.  The latter can give cause to rising prices.  Although I am no expert, it is the trend of price and or volume which is the important factor in Wyckoffian logic, not the action of the individual bars.   IMHO.

[Frantz Herr]

[Frantz Herr]

[Craig]

Frantz,

It seems to me that this graph is a good example of the A-T-C (Action-Test-Confirm) test.  In this case there was no confirmation and the stock price subsequently dropped.  What do you think?

Cheers, Craig

 

[Frantz Herr]

Craig, are you referring to the chart of $DWCF?  When I posted it I was thinking about how the TR might evolve, and whether the Supply that came in on the UA/UT was meaningful?  So far it looks to me like absorption may be occurring.  Frantz       

[skoutasg]

No one has posted all week, so I thought I’d attempt to get the juices flowing.  Attached our old-friend the Dow Future Chart in Intraday mode.  Is the index in Distribution or Reaccumulation mode?  To date, it appears price may head up or will it?  If up, we are looking at Phase C of a reaccumulation, which becomes the launch point for the next measured move up.  If price reverses into a phase D, then we may identify the TR as a Distribution structure.  Notwithstanding our enthusiasm for another measured move up is our knowledge that the Index is dangerously close to overvaluation, which I estimate at a price of $30,725 ($27,632 being a target price).  I wish Mr. Market had not recovered so fast from its March low.  Like most of you, I have many stocks still in recovery mode from the March beat-down so a Distribution in the Index in the coming weeks will not be a welcome site.,

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   YM.png
   

[jonthan]

Hello, I am extremely new to the wyckoff method but have been reading and watching everything i can on the topic. My question is how useful are these patterns in the Forex marke? I haven’t been profitable scalping fx lately and im hoping to change that the more i learn technical patterns, thanks for any responses!

[skoutasg]

Personally, I only apply Wyckoffian logic, not technical analysis patterns as the smart money can use these to wreck your trade, i.e. your effort at scalping.  I think you can trade short-term using Wyckoff because with every action there is a reaction.  To me, the judicious application of Wyckoff is buying at the bottom and selling at the top. However, it can be used for playing short-term moves.  Is the Wyckoff method applicable to forex, yes it is, the same principals apply.  You may enjoy the courses offered on this site.

[Frantz Herr]

skout, nice chart and analysis.  Question for you (and others) – when I drop to a lower time frame and I see structures like you are showing here, do I relate the time it might take the move to unfold to this time frame?  If it’s weeks I would expect the move to unfold over weeks, days over days, hours over hours, etc?  The reason I ask is that I sometimes find myself forgetting the time unit I am observing and imagine the move unfolding on a different scale.  Traveling to a different dimension!

[skoutasg]

Frantz:  Here’s a graphic illustration of your question.  It’s an excellent one.  When do we enter?  Intraday signals yes, the weekly no, as price has not yet exited the TR.  Do we wait for the latter to happen or pounce now?  Let’s let the readership answer.  Also, please answer yourself.  Best.

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   BRWKLY.png
   

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   BRINTRA.png
   

[Frantz Herr]

Here’s a chart I borrowed from the poster Dario Colo on Twitter.  XJO – a picturesque Wyckoff accumulation, at the 15 minute time frame…

[skoutasg]

Hello:  Anyone home?

[Frantz Herr]

[Craig]

Frantz, This seems pretty obvious to me (see PDF).  Had to pull a financial sheet for this company.  Qtrly Revenue & Earnings Growth says it all.  It says that the company is not economic at present.  If they can weather the current price storm they may live to fight another day.  My observation is to expect a price drop at the hinge point.  We shall see and I may have to eat my hat!  Cheers  Craig

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   200709_Frantz_Response_From_Craig.pdf
   

[Frantz Herr]

Thanks Craig!  The apex/hinge and resistance line on your chart sum up my views as well.  The rally from the March lows has been weak, and that March 9 high volume down bar needs to be overcome for a bullish interpretation.  So far not happening.  Be well!  Frantz

[Curt Miller]

Had a quick trade this week that resulted in an immediate loss.  Posting it here for post trade feedback.  I bought SFM thinking it was a breakout and BUA of a downward sloping trading range.  I liked the breakout of the trend channel and the rising volume out of the range.  My stop loss was $24.75 and was hit the next day after taking the trade.  In retrospect it looks like the wide bodied bar on 6/29 did not commit above the prior swing high of 26.05 and it was on weaker volume to boot.  Feedback would be appreciated.  Thanks!

[Frantz Herr]

Skout makes a good point about continuing to educate ourselves.  I enjoy studying his charts!  Practice is essential to improvement.  I love the opportunity to study a chart.  Here is my analysis of SFM.   I like to start with a higher time frame chart (weekly) to get a good idea of context; it helps to understand what is occurring in the lower time frame (daily).  I also do a P&F study when I am analyzing a stock to add to my own portfolio to get an idea of potential price targets.  I didn’t do one for SFM, but if the stock can begin to trend, there is quite a large Cause built.  Thanks again for the opportunity to practice my chart analysis!

[Frantz Herr]

SFM daily.  BTW, I wasn’t aware of the different bar colors you are using in Stockcharts.com (the SPX window at the top of your chart).  That is cool.

[Curt Miller]

I really appreciate your feedback Frantz!  I agree the weekly chart looks like SFM is building a cause for much higher prices.  Your chart shows a more flat trading range on the daily chart as opposed to the downward sloping range that I had.  One of the things I struggle with is how to define the borders of a trading range.  Do you have any suggestions on how to approach this?

[Frantz Herr]

Curt, when I first studied Wyckoff with Roman I was fascinated by the TR structure and the Phase labeling.  I remember Roman telling me to focus on Supply and Demand in one of the classes.  It took me a while to figure out why he said that.  As you can see, I now spell them with capital letters.  It is important to define the boundaries of a TR, but it is critical to understand volume and price and the message they convey about Supply and Demand.  They reveal where support and resistance reside.  I am getting better at it.  It takes lots of practice!  Keep studying, it will all come together for you!  Frantz

[skoutasg]

Curt:  Humbly, may I recommend the outstanding courses on this site.  You must think like a Wyckoffian.  Personally, the Wyckoffian method is the only method that will give you a fighting chance against the big guys.  I am not a fan of using candle bars or chart patterns because the smart money will use them against you.  Therefore, you must think like the smart money to have a fighting chance.  This method is not foolproof, however, since the smart money is not the smart money for nothing.  They can often paint a picture that will fool you into acting against your interests, so patience is the key.  Best of luck in your journey.

[Curt Miller]

Thanks Skout!  I am already on board the Wyckoff bandwagon.  It makes a lot of sense to me logically, however I have not optimized my skills yet.  I just finished the WTC 1 class this past week and plan on taking the WTC 2 practicum class in the fall.

[MrktWzrd]

what do you guys think of HRL  ? looks like something is in the making  ( HRL against XLP)

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   hrlxlp-1.png
   

[MrktWzrd]

taking a closer look at HRL  looks like some kind of absorbtion

after the buying climax , the rally testing the climax high at point C avergae to high volume indictaing that buyers are still in teh market..

the correction from point C to point D we have an increase in volume and price rejects the 50% level ie. buyers are stepping in again (SOS)

same is happening on point E volume increases and the 50% retr. level holds again after that we have a series of higher lows and some sort of compression towards the highs

indicating a breakout to the upside ? .. what do you guys think ?

 

 

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   hrl-1.png
   

[Frantz Herr]

[Frantz Herr]

Here’s a current chart of HRL’s industry group fyi

[skoutasg]

Nice call.  Looks like price it is concluding a reaccumulation phase with price now heading up (under distribution, 3rd and final phase of a reaccumulation).  Confirmed on my intraday and weekly charts.  What is your price target assuming a safe exit from this phase?  My target price is $55.80 so not much of a margin of safety to warrant a long-term play as it now stands.  Swing traders may think otherwise.  Wyckoffians need a breakout above $51.53 to peak further interest albeit with no margin of safety?  IMHO.

[Z1839]

I wanted to clarify two questions I had on volume in general:

1. Does a volume bar show the number of sellers in that trade period (the 1 candle?) or the total volume of stocks held by the market.

2. I know that for testing supply and demand, a long wick on the respective side with low volume, lower than the previous 2 volumes is a positive test. I’ve heard from some people that a higher volume than the two previous with a long wick is a better signal. Any thoughts?>

[Frantz Herr]

Hi Z, sorry for the lull in dialogue.  1 Each volume bar is the total number of shares (assuming it’s a stock) traded during the time period of the bar.  For each share traded there is a buyer and a seller.  2 A long tail or wick generally indicates an unsuccessful intention to move price in the direction the tail or wick is pointing.  There’s a lot more to it, though.  What is the context?  I like how you use brackets on your charts to isolate behavior.  You are on the right track.

Might I suggest playing a few of the Bias Games on this website?  Don’t look at the solution before attempting it yourself.  Imagine you are about to make a trade.  Then look at the solution to see where your interpretation is correct and where you might have missed a clue.  There are 50+ of them.  It’s a great way to develop your chart reading skills!

[Z1839]

Wow, I was not aware of the bias games. I will definitely check them out

[skoutasg]

Dow Futures Intraday:  In distribution or reaccumulation?  Take your pick.

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   YMINTRA.png
   

[skoutasg]

Is Gold Futures ready for markup after a lengthy accumulation phase?

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   GCINTRA-1.png
   

[Frantz Herr]

Is absorption occurring here?  Looks that way, but I still need to see price commit above resistance of the TR defined by the BC and start living there.  Gold’s seasonality favors that occurring.

[Author]

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