Supply/Demand, VSA, Wyckoff with Petefader

Beginner Questions Candlesticks, Chart Patterns, and Price Action
3568

Hey, guys. Here’s an analysis I’ve done for elsewhere, but I’d like your thoughts on what may be happening. Cheers.

Like I say, I’m just learning this forex volume stuff. I must say, it is doing a lot for my trading via understanding market movement and supply/demand. As I’m learning all the time, I’m forever spotting new things. With the EURUSD I’ve looked back over the hourly data since the highest high in early Feb, and here’s what I see. (by the way, I don’t look at that many pairs, and I typically forget everything I see and post and go back later to see what I coulda won/lost. Good thing I have a day job…)

On the 4hr there is a clear, clean downtrend, shown by a series of lower lows, lower highs. Classic. So, what we want to see, ideally, as counter-trend traders, is which of these lower lows is the last one. The Trend-trader way to do this is to wait until you see a higher low, of course. Pah, too easy!!

So, is there a way to see that this is the last low? Maybe. Only maybe. Perhaps if the highest activity of the day with the lower low coincides with that low, it could indicate smart money buying in at low prices - because they know that we are at the final (lowest) lower low. Sorry, that may be bit confusing, so take a look at the hourly…

On the 1hr chart I have marked the lowest candle of the lower lows with a red line. It is only during the most recent of these lower lows that the highest volume of the day coincides with the red line. I have not shown them all, as the cart would be too squashed up. I have checked this with both US and UK market hours. So, potentially, this is the final low we are at now.

So, I want a long entry, but we’re up high right now, at retail (high) prices, so I want a retrace to get in. Let’s look at the 15min

On the 15 min I can see a negative divergence, with the right high reversing off RSI=66, suggesting that we have come off the top of a BERC (not marked in). You can see the high volume right at the bottom, suggesting buyers. I’m anticipating that the market is going to retrace into the green box I have marked, testing to see if there are any more sellers down there (house cleaning into Eagle?) due to the negative divergence. Once it’s down into that green box, I shall look for some higher volume showing buyers coming in once more, followed by a sign that supply down there has dried up (a no supply candle). I’m tempted to set a limit buy order somewhere in the Eagle zone (786 to 886 retrace) as in a meeting all day tomorrow, coz I’m a maverick and all that. My stop would be a few pips below the 1.13 extension (all based off the fib on the 15min).

http://dl.dropbox.com/u/62680872/chart%20grabs%20to%20share/eurusdh4%20trend%20end%203-3-13.png

http://dl.dropbox.com/u/62680872/chart%20grabs%20to%20share/eurusdh1%20trend%20end%203-3-13.png

http://dl.dropbox.com/u/62680872/chart%20grabs%20to%20share/eurusdm15%20trend%20end%203-3-13.png

3569

Also, how does this GBPUSD 5min chart look? I think it’s accumulation.? A BACA is a Break Above, Close Above candle (I just realised the one I marked hasn’t done that, but there is a close above shortly after).

I’ve printed this from my Oanda MT4. I notice that the volume on IBFX isn’t so extreme.

gbpusdm5 accum 1-3-13.jpg700×316 31.9 KB

3570

rcmacf looking good.

Today I’m short G/U. Check out the 1hr top. Buy climax/bearish confirmation/No Demand/Upthrust. Quite a sequence.
5 min ND leading to push through for entry. Price wise, the push through auto support confirmed the 1hr ND and Upthrust. The only issue is I had to enter on news. I went smaller risk due to that.

3571

1hr G/U

guseq.jpg700×495 38.1 KB

3572

I’m looking out for a U/J short.

3573

Guess not! LOL. No trade taken today.

3574

Yeah, has been a slooooow day or two.

Thanks for the comments, Pete, loving your videos. More on the way to the youtube channel, or any other place?

3575

Cool. Yes, more youtube vids coming soon.

3576
3577

A long time since posting a chart here.
Took some out of the GU tonight, after seeing some good possible stopping volume and background strength as per the attached 1hr chart.

2013-03-11 GU 1hr.jpg700×354 28.6 KB

Looked into the 5min and established the AR point and also some prior resistance of note. Then saw the fib level went through that same resistance level. My thought was to ride the price to this area, lock in BE and watch the reaction to the no risk trade. Following is the 5min chart

2013-03-12 GU 5min.jpg700×352 24.1 KB


Granted, it did go into drawdown for some time, but S/L was never at threat, being 5 pips below the low of the day. It had some trouble when it eventually hit the fib level, and I considered closing, but I held on to it and it pushed through nicely.
After another big spike, I decided to lock some profits away and placed the SL under the recent pin highs - maybe a bit premature there and should have put it below the 50 fib line. I soon got stopped out, but had my locked in profits as shown.
2013-03-12 GU Close.jpg700×333 23.2 KB


Now, hindsight can be a real kicker and I was regretting the tight S/L as the profit could have doubled, but soon after, it shot down and would have taken my S/L if it were placed under the 50 fib level, so in all, I am happy extracting what I got anyway - especially for a Monday trade.

If anyone wants a closer look as the charts don’t show too well here, I have a link to them below;
2013-03-11_2357 - stewartk’s library
2013-03-12_0001 - stewartk’s library
2013-03-12_0223 - stewartk’s library

3578

I have been a little busy lately and so unable to contribute much.

Anyhow, does VSA work in other asset classes? Here is the CME 6E 03-13 Futures contract; for those of you unfamiliar with futures, it is simply a futures contract of the EU. It more or less follows the spot EU but is traded on an exchange. It is harder for newer traders to trade it as you need to buy full contracts (1 contract=125,000) and has exchange commission fees, larger margins required, etc.

Now lets see the chart: (This is a “Tick chart” - meaning it uses # of trades as opposed to time on the x-axis. For all intensive purposes do not let this confuse you and just assume it is time).

Highlighted we see high volume on the bottom @ 1.2964, and low volume as price moves up. We see a low volume AR @ 1.2981. I think if you watched Pete’s videos, then you probably have seen this setup before.

6E 03-13 (400 Tick) 3_13_2013.jpg700×360 23.5 KB

Now we wait and see what happens, we don’t just enter and we make sure the setup is valid. Just to explain my thinking at this particular point in time, I a looking for a low volume AR break signifying lack of selling.

If I see high volume at the AR, I want to see the candle close right at the top then low volume retest the AR - signifying professionals buying through the AR, not selling.

Finally I am also looking to see if a ND presents itself;if it does so on the AR, even better.

I will update this post regardless whether the setup breaks down or is valid with some commentary. If valid, the setup should be done by 10:30 AM EST. That’s right, I actually give my setups a time limit If it does not happen within a particular time period, then what I thought I saw probably was not what I thought I saw. Bit of a tongue twister but I hope that makes sense.

3579

A/U long today off break/test/continuation pattern, Volume confirming. Shown clearly on 1hr and 5 min entry.
I squeezed out 3 wins no loss this week. I’ll probably to do a video review.

3580

Notes from my trading journal on the recent AU long - Yes, a trading journal in my opinion is very important to learn from both winning and losing trades.
Possibly jumped in slightly early without looking too much into the trade plan.
The daily chart showed a clear 50-61.8 Fib area that would have rung alarm bells, but I did not look till after I entered the trade. Lesson learned on a winning trade :slight_smile:
The hourly chart shows High volume wide spread up candle related to positive Australian news, and the expected reversal from that peak down to the 50-61.8 Fib area, then a high volume reaction to that fib. From here, it looked like a long AU could be on - remembering that I had at that stage neglected the daily fib and was instead looking to go long to the recent high.
The 5 minute rejection at the fib level looked promising and waited for an Auto Rally point to set up, which it duly did. Then waited for a push through and close above this area, which it did at 1.03594. Entered there and took some drawdown, but was confident as volume going down on reducing volume (SM withdrawing from the decline). Soon kicked through again and at this stage, I realised I was in a longer term fib area, so kept a close eye on the volume and reactions.
As soon as the trade got to the previous high as marked, I moved SL to BE as a negative reaction would nullify the trades long probability. We got a high volume wide spread up bar which indicates weakness. On this one, I closed out half my position. We had a similar reaction on the next candle to the high, so removed 50% of the remaining position, and decided to leave the last 25% of original position to hopefully run.

2013-03-15_AU_Daily.jpg700×319 26.7 KB

2013-03-15_AU_1hr.jpg700×317 25.7 KB

2013-03-15_5min_AU.jpg700×318 24.1 KB

And due to image being a bit small to read the writing
2013-03-15_AU_Daily - stewartk’s library
2013-03-15_AU_1hr - stewartk’s library
2013-03-15_5min_AU - stewartk’s library

3581

Can I take this conversation off track just for a few posts?
VSA by Pete has been my trading technique for about 5-6 months now. I have had better results with the trend. I moved away from spot to Binary options (Nadex). Ok, before other comments pour in about BO’s being a scam (They are regulated, may be the only ones for retail US traders). I am not advertising Nadex here but if any one of you is using these instruments I am interested in discussing applying Pete’s VSA strategies on them. I had better success with Bull spreads on Nadex specially when the price tests the up thrust/down thrust but I have not been able to wait for a push through confirmation as the spread value will not be favorable for better R:R. Another issue has been contract expiration time, most of the time Pete’s methods mechanically test 50,618 but at times after the contract expires. So I haven’t been a good judge of timing. Anyone interested in this conversation? If you are interested then I want to limit the conversation to Pete’s VSA on BO’s or Bull Spreads.

Pete, Whats your opinion on Nadex? Have you looked at them? Comments?

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2013-03-15_1410.jpg700×548 40.2 KB

an extreme entry, I am a spring fan :slight_smile:

3583

Wow, the return of Pandras. Bigger, faster, stronger than before! haha. I’m out for the weekend, no time to make the video I mentioned but I’ll try when I return Sunday. PEEEEAAAAACCEE!!!

3584

Yes, I returned. I tried other methods along the way but still this is the best. I have little time to trade because other projects are going on but later gonna get more time. Have a good weekend to all.

3585

Great thread! Wondered if you could please comment on the [B]accumulation[/B] overview below:

• First, the indecision should be quite visible. In other words the volume should be low and quite. No huge volume upsurges.

Even if the volume is relatively higher the range between up day volumes and down day volume should be narrow.
• Second, the spread of the bars (High – Low) should be narrow.

•[B] Third, the volume should shrink near the support line and expand near the resistance line.[/B]

I dont understand and I think this is incorrect, please any comments many thanks

3586

I, too, have seen this. I think it is from a write up by Karthik Marrar, he gives visual examples, too. Rather contradictory to this thread.

3587

Google Wyckoff Schematics by Market Technician. That is a good document that shows accumulation and distribution zones relevant to this thread :slight_smile: