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Trading Using Control Bars

  • #161
  • Aug 4, 2011 2:39am Aug 4, 2011 2:39am
Many thanks to Karthik and Villonius. let me know the importance of extreme price of CB and those price indecision areas inside CBs.
  • #162
  • Aug 4, 2011 3:16am Aug 4, 2011 3:16am
Hi Yisa

Read my last post and you should be able to deduce yourself what happens at the extreme of a CB. You are using Candles so it should be fairly straightforward. As I said try to understand in terms of Supply and Demand.

I suggest you view some of Sam Seidens work there are Threads on this site plus plenty of videos available with a simple search on the net.

Best regards,


V
  • #163
  • Aug 4, 2011 3:22am Aug 4, 2011 3:22am
This is exactly the type of thing that I was wonderig about in my previous post when I asked if the smaller timeframe bars have a "story" to tell about the larger time frame's control bar.

DrDave

Quoting Villonius
Hi Yisa

Something that may help you when looking at CBs on an hourly is do what u did here ie look at 15 min to see the bars that constituted that 1 hr CB.

In this case we had a large 15 min CB finishing very close to its high. Next bar is a doji which typically indicates indecision neither the bulls or the bears won in that 15 min interval.

Look at the next 2 15 minute bars. The 1st one is strongly bullish finishing v close to its high. 2nd on similar size but not quite as bullish finishing about 2/3 way up.

Put the sequence together.Bullish...
To free Gazans of Hamas, use whatever it takes.
  • #164
  • Aug 4, 2011 3:41am Aug 4, 2011 3:41am
Hi All

Here is an hourly chart of EUR/USD for the last couple of weeks.

CB1 is a strong bullish bar completely dwarfing any of the recent bars and is evident of strong demand.

CB2 is a long bearish bar much larger than either of the 2 previous bearish bars. However when it moves into the area of the bottom half of CB1 (ie where the Bullish move began the day before) there is strong demand and price subsequently takes off north from there.

So from here we know there is strong demand from the open of CB1 to the close of CB2. We can now label this a demand area.

This week price revisits the area and surprise surprise there is still strong demand there. CB3 is the bar Karthik identified yesterday and there is clearly strong demand as you can see from the long tail of the bar.

Yesterday price again re-visits the demand area but exceeds the low of CB3 and touches the green horizontal line at the base of the demand area before again heading north.This was also coincidental with the SNB news which gave EUR a boost.

You should also note there is further demand below that area as evidenced by more long tails to the left.

On this chart there are also some downtrending equidistant resistance and support lines. Notice how the lower green line is acting as support and there are only tails below it.

So yesterday there were 3 confluent factors suggesting a buy at the low.

1) Selling into a strong demand area
2) Base of CB3 acting as support.
3) Downtrend support channel

As I write this I notice the top of CB3 which was resistance now acting as support.

Regards to all



V
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  • #165
  • Aug 4, 2011 4:02am Aug 4, 2011 4:02am
Kindly comment on this morning's London Open trades. I am only posting my M15 chart with annotations for your kind perusal and comments please.

Best wishes.
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Hercs
  • #166
  • Aug 4, 2011 4:02am Aug 4, 2011 4:02am
Hi Dave

That post was really just to answer the question as to why the hourly extreme didn't hold and why when Yisa looked at the 15 minute TF the price reversed when it did.

As Karthik has already advised traders trade different TFs. He has already shown a method for finding a CB on an hourly frame and then dropping down to a 15 min to find entries and exits around the extremes. He hasn't demonstrated a method for trading inside the range of the bar.

What I showed was how after identifying a CB on a 15 min TF you could analyse the subsequent PA at the extreme of the CB in terms of Supply and Demand. This would then help to identify the probability of Price rising or falling when it re-visits that level.

Hope that helps


Regards,


V
  • #167
  • Aug 4, 2011 4:18am Aug 4, 2011 4:18am
Hi Hercs

I'll chip in although hope Karthik will also provide some commentary.

What happended at the low of your CB when it was re-tested ? Long tailed hammers ie demand. What is LIKELY to happen when it re-visits that area ? More demand. This is exactly what happened in Frankfurt session price quickly moved to the top of the CB.

What happened last time price was at the top of the CB range ? Brief consolidation then it fell ie Supply overwhelmed demand. What is LIKELY to happen nxt time price re-visits that area ? Too much supply. So as soon as u see the reversal signal at the extreme of the bar you are good to go knowing the highest probability is that price will continue to fall.

If you sold the London Open then good job.


Best regards


V
  • #168
  • Aug 4, 2011 5:45am Aug 4, 2011 5:45am
Quoting Villonius
Hi Hercs

I'll chip in although hope Karthik will also provide some commentary.

What happended at the low of your CB when it was re-tested ? Long tailed hammers ie demand. What is LIKELY to happen when it re-visits that area ? More demand. This is exactly what happened in Frankfurt session price quickly moved to the top of the CB.

What happened last time price was at the top of the CB range ? Brief consolidation then it fell ie Supply overwhelmed demand. What is LIKELY to happen nxt time price re-visits that area ? Too much supply. So...
=============

Hi V,

Thanks for your reply; much appreciate your time and insight.

I actually managed both directions very successfully.

I have been trading for 13 years and never had a really good grasp of trading the longer TFs although I always took my direction from H4 and H1 charts with the help of indicators. This method however, has given me extra ammunition and I trust that with help from guys like all of you here, I can get into a higher League sooner.

Best regards.
Hercs
  • #169
  • Aug 4, 2011 7:46am Aug 4, 2011 7:46am
Hi Hercs

You welcome. Wow 13 years u must have learned an awful lot in that time. My time is a year and a bit. Over that year I've learnt to ditch the inicators and try to understand PA.

As I mentioned before I use it as confirmation for OB/OS and for divergence. Here's an hourly from Monday.

CB1 takes out Asian low indicating that short term up move from end of last week is in trouble. CB2 confirms that. Some divergence in overnight Asian PA. Tues sees Ks CB followed by another bullish bar but the next bar is key as it completely takes it out. Note how that bar acts as resistance.

Then Weds more divergence extending into Frankfurt session followed by SNB news and a big reversal bar which pauses at base of BE from Tues. Top of BE acts as short term resistance but bulls have their way.

Now base of CB1 and the Asian low act as resistance. Price backs off and finds support at .. yes u guessed it.. top of BE ! Price reverses and again hits resistance before breaking through but there is no conviction. By the way drop to a 15 min TF there to see where resistance kicks in. Quite illuminating. Also note Price divergence through that period.

Price heads south until it once again hits the top of that BE where there is a strong bounce in Frankfurt session. That is immediately reversed in London and we see another Bearish engulfing candle which pauses briefly at the top of Tues BE before heading south and bouncing off top of Ks CB. Resistance again at the top of Tues BE before another big Bearish bar which bounces at base of Tues BE. Resistance again at the base of Thurs BE.

As u can see the key bars are CB1 CB2 Karthik CB and Tues BE.

Next up the ECB press conf with its usual volatility. Hope that was helpful and makes sense. Comments welcome.

Regards


V
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  • #170
  • Aug 5, 2011 12:42am Aug 5, 2011 12:42am
Quoting Villonius
Hi Hercs

I'll chip in although hope Karthik will also provide some commentary.

What happended at the low of your CB when it was re-tested ? Long tailed hammers ie demand. What is LIKELY to happen when it re-visits that area ? More demand. This is exactly what happened in Frankfurt session price quickly moved to the top of the CB.

What happened last time price was at the top of the CB range ? Brief consolidation then it fell ie Supply overwhelmed demand. What is LIKELY to happen nxt time price re-visits that area ? Too much supply. So as soon...

lol...i dont think i can explain this better....i have watched ur posts in this thread and all have been very good and explanatory...thanks for the work in here...
  • #171
  • Aug 5, 2011 2:13am Aug 5, 2011 2:13am
Quoting Hercs
Kindly comment on this morning's London Open trades. I am only posting my M15 chart with annotations for your kind perusal and comments please.

Best wishes.
Hello hercs,

very good example, I think Villonius has provided an excellent comment already. What I find important ( and Villonius shows ) is to see the CB in a broader market context.

Things to consider :

- time of day ( opening of sessions, news expected )
- where are we in the week, possible low or high of week
- divergences if indicators used
- average daily range of pair
- fractal highs or lows of higher TF`s breached / contained

etc.

Good trading to all.


___________
michael
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Be like water.
  • #172
  • Aug 5, 2011 3:47am Aug 5, 2011 3:47am
Hi Michael,

Luurvely chart ! Do you also work off 15 min TFs ? Especially keen on the "Look to the Left". Guess you've looked at a fair bit of Sam Seidens work.

This is an extremely important piece of advance. Always do this when planning ur trades.

Attached is an updated hourly. We've just seen the formation of a Bullish CB. Why is it a CB ? It's nearly twice as large as any of the previous dozen candles. Hopefully Karthiks algo will confirm this

Others points to note. Notice how the demand area turned to supply after it was convincingly broken. Why does this happen ?

Demand implys buying and that means traders with long positions. So when it breaks some are stopped out but many are not but they no longer want to be long and are looking for a way to get out without too much loss. So when price returns to that area they take the opportunity to sell and close out their longs at break even or close to it. This of course introduces more supply.

Also short traders who missed the original break will be looking to go short when it returns to the breakdown area so more supply in that area. This inevitably leads to lower prices. That is a reason why Breakout Pullback Continuation trades work so well. Lots of traders on your side !

Regards to all and profitable trading.


V
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  • #173
  • Aug 5, 2011 6:02am Aug 5, 2011 6:02am
Quoting msmarple
Hello hercs,

very good example, I think Villonius has provided an excellent comment already. What I find important ( and Villonius shows ) is to see the CB in a broader market context.

Things to consider :

- time of day ( opening of sessions, news expected )
- where are we in the week, possible low or high of week
- divergences if indicators used
- average daily range of pair
- fractal highs or lows of higher TF`s breached / contained

etc.

Good trading to all.


___________
michael
Hi Michael,

Thank you for your time, much appreciated.

I am enjoying the tuition from all of you guys here and I guess you too as it makes one sharper as the teacher, doesn't it?

Wishing you success.
Hercs
  • #174
  • Aug 8, 2011 10:33am Aug 8, 2011 10:33am
Hi Guys

Here is an hourly chart of EUR/USD over the last week. As we can see lots of volatility this being due to fundamental data changing on an almost daily basis.
The chart should be fairly self explanatory. 2 big control bars CB1 and CB2 controlled the action at the start of the week. Notice the close of CB2 around 1.4200 continued to act as ongoing support and resistance level even after price closed outside it.

CB3 closed beyond previous support effectively taking out the longs and now prior support acts as resistance. Now CB4 and CB5 indicate current demand levels. CB1 shows supply along with CB6.
Looking at the bigger picture for the last week EUR/USD has been in a clear down channel and the overnight break out of the channel has clearly failed. Notice also price divergence from the RSX indicator. With divergence that doesnt mean an immediate reversal but you should keep your eyes peeled for a reversal signal. Sure enough there is a large inverted hammer during the early London session today which encourages all the longs to exit. Note the open of CB3 occurs very close to the close of CB1
Fundamental or longer term traders would have found the last week very tricky to trade but you can see how identifying key Bars/Candles on this hourly timeframe it's possible to understand why PA moved the way it did.
Good trades to all

Villonius
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  • #175
  • Last Post: Aug 10, 2011 9:07am Aug 10, 2011 9:07am
I found today US session one uncomfortable thing for EURUSD.
the demand area （1.4264-1.4283）could hold the price. under the background of H1 MACD bearish divergency, this is normal. but why the bounce off so little. Accorrding to S/D theroy. Many sellers made mistake at this area. then they need to buy their positions back.
M5 chart attached.
BR
Yisa
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