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HCR-LCS + SFP Research thread

  • #121
  • Edited 11:16pm Jul 7, 2013 10:50pm | Edited 11:16pm
Hey, LT

I am not nitpicking here, just want to make sure you are aware of the correct form of a BUEOB as opposed to a DBLHC.

The BUEOB you drew on your diagram is actually not a BUEOB, it is a DBLHC as, the low of the bar does not exceed the low of the previous bar.
A BUEOB's High & Low must both exceed the High & Low of the Previous bar.
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  • #122
  • Jul 8, 2013 12:28am Jul 8, 2013 12:28am
CAD/CHF is showing signs that it may find support at the lower area.
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  • #123
  • Jul 8, 2013 2:17am Jul 8, 2013 2:17am
Quoting Pinbar
{quote} Many things to ponder here, which is great. I need some time to really think about these. Concerning the HCR or LCS time frame which the PBT&CA or below, I have some thoughts about the dimension of time in the penetration of a HCR or LCS level. Well, it is not really time but the actual depth of the penetration. However, as we all know, the greater the penetration of an area, the more space this creates for price to move through after the pullback and RT. I am also pondering if it is not just about space but time? Time in the sense that,...

Interesting thought.

I think both, the time spent and the space occupied beyond the HCR or the HHR do to an extent affect the ability of the HCR / HHR flipping from resistance to support and providing us with a bias as to whether this is a breakout or a fake out.

That said, I don't think these factors are entirely conclusive in providing a definite bias.

What matters more than any other factor is I think the action itself that is comprised of that space and time. The wicks on bars, the overall range, the bodies...

Let me explain with some examples.
I believe . . .
  • #124
  • Jul 8, 2013 2:40am Jul 8, 2013 2:40am
Quoting ghous
{quote} Interesting thought. I think both, the time spent and the space occupied beyond the HCR or the HHR do to an extent affect the ability of the HCR / HHR flipping from resistance to support and providing us with a bias as to whether this is a breakout or a fake out. That said, I don't think these factors are entirely conclusive in providing a definite bias. What matters more than any other factor is I think the action itself that is comprised of that space and time. The wicks on bars, the overall range, the bodies... Let me explain with some...
Here is an example of quite some time spent underneath the critical LLS and LCS areas yet still price fails to break to the downside and turns out to be a fake out.

You can see right from the break out point we have implicit divergence kicking in. (For those unaware of what this is, its a term I use to spot lack of momentum or divergence smack from the chart only. It is characterized, as in this case, by bars not being able to close under former bar lows (for momentum exhaustion during a down trend) or above former bar highs (for momentum exhaustion during an uptrend)).

The bar that breaks out and actually closes below the LLS or simply the swing low, is a pretty weak bearish bar signified by the longer wick and a weak close. Its closer an IPB actually. Two subsequent days we see the market going really flat, and despite testing the LLS on each day it failed to gather enough sell orders. The result then is a surge back up and a quick retest to confirm the support function of the LLS. In order flow terms the retest implies that all liquidity juice available at the LLS level has now been sucked up by the big guns and price can now move easily to the upside.

I had mentioned in a previous post that reading order flow, fake outs and what the big guys are up to, is simply wondering on the simple question: "Is price doing what it should be doing?"

In this case, after a break under the LLS, Price should be headed down. What then, do 2 back to back really small nothing bars tell us?

Yes price has spent nearly 3 days under the swing low. But is that necessarily indicative of the fact that the LLS has really turned into resistance?

g.
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I believe . . .
  • #125
  • Jul 8, 2013 3:02am Jul 8, 2013 3:02am
Quoting ghous
{quote} Here is an example of quite some time spent underneath the critical LLS and LCS areas yet still price fails to break to the downside and turns out to be a fake out. You can see right from the break out point we have implicit divergence kicking in. (For those unaware of what this is, its a term I use to spot lack of momentum or divergence smack from the chart only. It is characterized, as in this case, by bars not being able to close under former bar lows (for momentum exhaustion during a down trend) or above former bar highs (for momentum...
Very interesting Ghous

However, if we look at the weekly tf and that consolidation box HCR, ignore the fake out as it was obviously a fake out.

We can see that the area you mentioned on the daily tf, never managed to break the HCR which by hindsight, we can see had been holding this up all along.
That said, I think such a weekly area, even though it is way back, is always going to trump a daily level.

So all in all, we did not have a breakout and thus spent zero time below this level.
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  • #126
  • Jul 8, 2013 3:14am Jul 8, 2013 3:14am
Quoting ghous
{quote} Interesting thought. I think both, the time spent and the space occupied beyond the HCR or the HHR do to an extent affect the ability of the HCR / HHR flipping from resistance to support and providing us with a bias as to whether this is a breakout or a fake out. That said, I don't think these factors are entirely conclusive in providing a definite bias. What matters more than any other factor is I think the action itself that is comprised of that space and time. The wicks on bars, the overall range, the bodies... Let me explain with some...
Let's take a look if more space occupied above a former swing point should be necessarily more bullish...

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Attached is the EUR/MXN chart with a badass pin bar that worked like a charm. Notice how its also a fake out. Notice also, that over a period of three days price actually tests as much as 200 pips of solid space above the HHR. I reckon many 1H and 4H bar closes above the HHR and HCR. The way I see it it only means the pin bar comes with a much longer nose/wick and hence is really more strong than if it had a smaller nose in case of less space occupied above the HHR region.

Let's jump down a time frame to see what price action looked like in a more chopped up, more revealing setting:

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Once again it has boiled down to particular action and the bar to bar analysis which truly reveals what price is really looking to do. The banks are smart. They will some times target the exact levels, some times place their above them, and other times way above them. At times even under them...

They need to make this all look like too unpredictable and maybe even "random". The dimensions of time and chart space are often the variables they like to play around with to create the variability needed to safeguard their guile.

Our bigger stories, confluence, space, and the understanding of support and resistance can get us really deep into the territory of these bigger players and market makers and thats why I am always worried when I see new people trying to attempt trading order flow through fake outs or even thinking about them too much. Its not until you can look at your chart in aggregation and combine the different elements at play according to their relative importance to construct the bigger story, that you can consistently nail this.

just because I am writing doesn't mean I have mastered it either. I too am practicing. I make mistakes too and miss out on what later can turn out to be darn obvious. But every day that passes by it adds to the knowledge and experience and that's all that matters...err...aside from making sure you're enjoying every second if it too.

g.
I believe . . .
  • #127
  • Jul 8, 2013 3:19am Jul 8, 2013 3:19am
Quoting Pinbar
{quote} Very interesting Ghous However, if we look at the weekly tf and that consolidation box HCR, ignore the fake out as it was obviously a fake out. We can see that the area you mentioned on the daily tf, never managed to break the HCR which by hindsight, we can see had been holding this up all along. That said, I think such a weekly area, even though it is way back, is always going to trump a daily level. So all in all, we did not have a breakout and thus spent zero time below this level. {image} {image}
The highest close of resistance for that period / box of consolidation for me would still be the close on the first of the two bars that you excluded as being a fake out.

A true fake out would have only left a wick behind. However after that close above the lower level you drew, I don't see how it should be excluded and not treated as the true HCR for that "period" of resistance.

Again dude, I am not into HCR and LCSs...

g.
I believe . . .
  • #128
  • Jul 8, 2013 3:30am Jul 8, 2013 3:30am
Quoting ghous
{quote} The highest close of resistance for that period / box of consolidation for me would still be the close on the first of the two bars that you excluded as being a fake out. A true fake out would have only left a wick behind. However after that close above the lower level you drew, I don't see how it should be excluded and not treated as the true HCR for that "period" of resistance. Again dude, I am not into HCR and LCSs... g.
I hear you on the Fake out but, Jarro has taught me that the consolidation areas can have a fake out like that.

Here is an explanation of what he taught me or at least, the way I remember it.

Totally hear you on that, I am not into the tricky areas of HCR LCS like that one.

Come to think of it, I am sure I have also seen Mike, use a flag like that one and disregard the fake out, also.
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  • #129
  • Jul 8, 2013 3:51am Jul 8, 2013 3:51am
This is one of Jarroo's charts and you can see, while he is marking the fake out to take notice of it, he is actually not using it as the level.
He explained to me that, this is because it found very little support on the pullback after it closed above the consolidation area.

This actually has a little bounce, much more than the EG one.
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  • #130
  • Jul 8, 2013 3:59am Jul 8, 2013 3:59am
Here is another one of Jim's charts where he is explaining it to me.
Notice how he is not using that HCR in the fake out again?
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  • #131
  • Jul 8, 2013 4:11am Jul 8, 2013 4:11am
Quoting Pinbar
This is one of Jarroo's charts and you can see, while he is marking the fake out to take notice of it, he is actually not using it as the level. He explained to me that, this is because it found very little support on the pullback after it closed above the consolidation area. This actually has a little bounce, much more than the EG one. {image}
Yes I hear you,

Obviously I can't challenge Jarroo or his approach specially when I don't know too much about it.

Anyhow, the examples I gave were based on the HHR/LLS levels which I use as opposed to the HCR/LCS levels for determining my fake out setups so I guess they are relevant in that sense. Maybe not so much with the HCR/LCS context...

g.
I believe . . .
  • #132
  • Jul 8, 2013 4:27am Jul 8, 2013 4:27am
I totally agree Ghous & I need to understand your take on it as much as Jarroo's take on it.
Will put my thinking cap on and ponder it.

I am sure that if Jarroo comes around he will explain it or tell me I am wrong, either is fine for me as long as we get to the real deal.
It is probably because he considers the established consolidation to be stronger than a spike with no polarity flip of the level being confirmed.



Better explain a bit in a simple diagram of what I was talking about for the new people.
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  • #133
  • Edited 5:12am Jul 8, 2013 5:00am | Edited 5:12am
Quoting Pinbar
I totally agree Ghous & I need to understand your take on it as much as Jarroo's take on it. Will put my thinking cap on and ponder it. I am sure that if Jarroo comes around he will explain it or tell me I am wrong, either is fine for me as long as we get to the real deal. It is probably because he considers the established consolidation to be stronger than a spike with no polarity flip of the level being confirmed. Better explain a bit in a simple diagram of what I was talking about for the new people. {image}
So we are taking a loss on the long on the first PBT&CA instance when price doesn't hold at the HCR?

Just trying to get my head around this...

g.
I believe . . .
  • #134
  • Jul 8, 2013 6:11am Jul 8, 2013 6:11am
Quoting Pinbar
{quote} Not sure what you mean about "PBs breaking out in one day and Outside bars and IBs breaking out in two days. I see all Daily PA either breaking on the next bar or in two days. In the case of the daily PA bar not breaking on the next daily bar, people like Mike will not take the trade as it is a sign of lack of momentum and order flow. Can't see that an Outside bar has more momentum than a PB, it can't really when you think about it as, they are both simply extensions of order flow. I lean more these days towards not the bars themselves...

Hi Steve!

That was not actually what i meant. I just noted that while in the case of PinBars (PB - sorry for my abbreviation) the process of newbs going for the break and the "big hands" pushing them down happens in one day. While in the case of InsideBars or Outsidebars (Or DHLC etc) this process happens in two days.
And this is what i wanted to interpret on my picture - that the Engouldfing bars and insideBars are pinbBars if we look at a "2Day Chart" - and so then the whole order flow concept is the same...

have a nice day guys!
Stephen
It's all psychology...
  • #135
  • Jul 8, 2013 6:57am Jul 8, 2013 6:57am
This is my favourite thread! For me the thread title is rather "Two pros teaching dummy Stephen now "

Ghous! - The was you described those two charts with order flow - i was like:
I got a question though:

"In order flow terms the retest implies that all liquidity juice available at the LLS level has now been sucked up by the big guns and price can now move easily to the upside."

Do you mean that all the guys who wanted to go short on the break did it already?
I can imagine to scenarios: Price breaks up (like it did) - cause just as you say, the liquidity is gone. (But we were not sure if how many sells are at the close... (Hmmm however after sich a weak breakthrough and such a long struggling at the Lows, i dont think many did...)
Now could it be possible that price breaks short? I mean when we got such a "battle" between sellers the buyers got weak at the end too, didn't they?

Maybe im just looking for some missing puzzle pieces here. Or how would you have explained if price brok down. (Or if you think my question is stupid cause after such a weak break with implicit divergence we don't have much power to go south, its okay too
Could you give me some light here?

Cheers,
Stephen
It's all psychology...
  • #136
  • Jul 8, 2013 7:28am Jul 8, 2013 7:28am
Quoting LamerTrader
This is my favourite thread! For me the thread title is rather "Two pros teaching dummy Stephen now " Ghous! - The was you described those two charts with order flow - i was like: I got a question though: "In order flow terms the retest implies that all liquidity juice available at the LLS level has now been sucked up by the big guns and price can now move easily to the upside." Do you mean that all the guys who wanted to go short on the break did it already? I can imagine to scenarios: Price breaks up (like it did) - cause just...
Hey Stephen ,

It would have made more sense if price had broken down earlier when it first broke through the LLS and pulled back to test the LLS as resistance. It did not hold and price shot back up. Every bit of this explains that the bulls were in control all the time.

The second retest, this time from the upside, to test the LLS as support again simply was a means to consume any remaining sell orders and their stop losses as well as get on board more buyers who would be willing to get a share of the move at a discounted price (rather than having to buy later on when the initial leg of the trend is already established). Basically just wiping out the bearish activity hence consuming on every milliliter of the juice available to execute large position sizes

hope this clears up.

g
I believe . . .
  • #137
  • Edited 8:44am Jul 8, 2013 7:53am | Edited 8:44am
Quoting ghous
{quote} So we are taking a loss on the long on the first PBT&CA instance when price doesn't hold at the HCR? Just trying to get my head around this... g.

Sorry, had guests and was away from the PC.
It depends, Jaroo would look for a signature on a smaller TF on the way back to that level.

Edit:

I know Jim, will look for an H4 or H1 signature on the pullback to a level.
Myself, I will look for an M30 or even M15 signature if there is no H4 or H1 signature.

Looking at that chart I posted with the what I caled a fake out, we can see that on the pullback to the level, there was no H4 or even H1 signature saying that this area had flipped to support. It just rocked through the area so, I doubt we would take a loss on it.

If you see what I mean.
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  • #138
  • Edited 8:40am Jul 8, 2013 7:55am | Edited 8:40am
Quoting LamerTrader
{quote} Hi Steve! That was not actually what i meant. I just noted that while in the case of PinBars (PB - sorry for my abbreviation) the process of newbs going for the break and the "big hands" pushing them down happens in one day. While in the case of InsideBars or Outsidebars (Or DHLC etc) this process happens in two days. And this is what i wanted to interpret on my picture - that the Engouldfing bars and insideBars are pinbBars if we look at a "2Day Chart" - and so then the whole order flow concept is the same... have a nice day guys! Stephen...
Still can not follow what you mean.
The market decides if and when a PA bar will break, not the form of the PA.

Also, a true PB at a good location does not get pushed down by the big boys, they designed it.
It is there hand in Poker.

Maybe, what we are talking about is confusing you and you may just want to stick with regular PA off PPZ levels for a while.
The PA that is taught in the J16 thread is not a fake out, they are the order flow just the same as what we are talking about in this thread only from a different perspective. We are trying to enter before the larger TF PA is formed, to get in at a better price.

Look at the GU entry I made last week.
I got in on the M30 pb off the weekly LCS.
This morpded into an hourly, H4 & Daily BUEOB but, I was in with a small stop and before the Daily BUEOB ever formed.
Also note, the Daily BUEOB did not take two days to break.
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  • #139
  • Edited 8:42am Jul 8, 2013 8:13am | Edited 8:42am
Hey Ghous

Is the W-LCS on GU showing me an M15 Fakey?
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  • #140
  • Jul 8, 2013 9:50am Jul 8, 2013 9:50am
Quoting Pinbar
{quote} Still can not follow what you mean. The market decides if and when a PA bar will break, not the form of the PA. Also, a true PB at a good location does not get pushed down by the big boys, they designed it. It is there hand in Poker. Maybe, what we are talking about is confusing you and you may just want to stick with regular PA off PPZ levels for a while. The PA that is taught in the J16 thread is not a fake out, they are the order flow just the same as what we are talking about in this thread only from a different perspective. We are trying...
Hi Steve!

Never mind. I know that price decides if our PA was valid by breaking it. Ghous described the order flow of the pinbar - so then it was clear for me what happes "behind the walls". And then i just realized that at a BUOB or an IB the same thing happens but slower. And thats why i brought the pictures: So we can see that if we merge a BUOB into a "2day chart" what do we get - a nice pinbar. And what do we know about the order flow of pinbars... Well that what ghous just told us...
So eventually (for me) its proven that the order flow of the BUOBS is the same as for pins, just it takes more time... That was my point.

take care,
Stephen
It's all psychology...
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