How to Read Chart

This idea valid for all markets

Sometimes in my post I use the word breakout. Let me clarify what meaning I put in this term.

Simply talking,

-> breakouts, bullish breakouts - is the process of successful crossing of resistance line. Price struggles above resistance (or zone of weakness) and does not move back.
-> breakdowns, or bearish breakdowns - is the process of successful crossing of support line. Price struggles below support line (or zone of strength) and does not move back.

-> fake breakouts, or traps for bulls - is the process of false crossing of resistance line. Price attracts traders in longs, because they think the advcane will continue. Unfortunately for them, soon price move back.
-> fake breakdowns, or traps for bears - is the process of false crossing of support line. Price attracts traders in longs, because they think the advcane will continue. Unfortunately for them, soon price move back.

Let's go to example.
In the morning I've posted this picture in Telegram:



Here is original big picture


My goal was to turn your attention to following idea:

After period of dullnes (flatty sideways movements), traders and trading bots become sensitive to breakouts as they desire to open trade at the very beginning of the planned trend.

Now turn to cluster chart. Red clusters - executed SELL orders, green clusters - executed BUY orders. Below the clusters - delta indicator, it shows difference between BUYs and SELLs



1) The balancing wedge, or the zone of dulling flat. We got resistance line above range, and support line below the range. The profile forms the shape of gaussian bell. Which way the market will move from it? Here is the clue comes...
2) Trap for bears started to form here. You see effort of sellers (red clusters) to breakdown the support.

3) Price quickly reversed. Green clusters point on buying. Trap formed. It increases chances on the genuine bullish from initial balance.

4) here is mentioned bullish breakout (effort of buyers to overcome resistance).

Setup worked fine. and it works fine often.

Hope, this post was helpful to understand the concept of breakouts.

I see the exhausting of uptrend on #USDJPY market and here is why:
1> the decreasing of the bullish progress
2> EVRT. The tiny range on up-bar with volume above average. This is a hidden supply.
3> No demand
4> SLKT (Trap for bulls) Note price did not reach top line of the up-trend channel.
Some support should arrive from center line. But nevertheless, In described conditions, I expect the breaking down the center channel with reaching the bottom line.

AB balancing wedge is narrowing. The NS+DB sequence did show that #BTC was not ready to break down B. But this scenario remains valid as we have

 

1. Major zone of weakness above 9300 (from 21/Jun till 24/Sep)
2. Big SB 24/Sep
3. Fake breakout (circled blue).

The recent up-bar with big volume looks like killing SLs above 8300. Note, we have minor SB on background. Many Sellers, who entered shorts on 15th/Oct, placed their SLs above 8300. Now they knocked out. If this interpretation true, we will see a building of a Shape of weakness (Red triangle) with a new attack on line B.

Be cautious, price is moving near the center of the wedge. This is why the market is vulnerable to send confusing signals.

Here is analysis of TSLA stock. I did not pay attention to its price for a long time. Chart formed a great story here.

Blue line is 200 round number level.

 

1. As price broke under the blue line, market did feel some sort of Panic. The Panic increased by breaking down the support line of big range channel. … But look the volumes/price range. Narrow range amid too much volume. What does it mean? Professional buyers absorb cheap good stock.
2. Genuine Demand Pushed Price Higher.
3. Here is the next decline and approaching 200 line. But look the volumes this is a lack of Supply Pressure. Market experienced lack of Sellers.
4. Fake down move (Trap) before advance.
5. Demand up-move (probably, on good news about Earnings).

So, shorting this stock is risky. I believe, price has the potential to reach the top orange line of big multi-months channel.

I know, this chart is not very useful because you've never been trading this #stock #HALL.

However, it provides the perfect example of Zone of Weakness. Classical Technical analysts should interpret it as simple "double top". But we are chart readers, and we can see more about this pattern.

1) Buying Culmination as price hit 20.0 round number after long bullish run. Highly likely, some "good news" was released those days. But the volume is extra high. Professional traders like these broad markets because it allows them to distribute (SELL) big orders of stocks.

2) Here is the Selling pressure wave. It culminated in minor Panic Selling day (3) around 17.60

4) You can suggest, this is NS+DB. Very tricky moment. It seemed that bulls attempted to breakout above the previous high...

5) ...but here we have too much volume on up-bar. Is it a hidden weakness?

6) Yes! This is supply bar, this day erased all Bullish progress and Trapped buyers. Here is the bearish Cha Cha. Chart testifies market is not interested in moving higher than 20.0.

As we can calculate target projection from the width of wedge, the low around 15.20 is expected.

I have been learning the Wyckoff method for a long time but am still not consistent in my analysis. I think now I have found the missing link to perfect my skills.
Thank you!

Please let me know if you also mentor.