Price Action Exercise: What Happened Next?

Hey all,

The ability to read price action, or at least get a hint from it can be an invaluable edge in trading. It is something however that can be hard to devote any time to, and so I thought I would try this little exercise for hits and giggles.

I have seen this done in other forums and it is a great little learning exercise, as well as a great way to see how different people trade. I will post a chart, with dates and price removed (as to make it harder for people to find that point in history) and I'll ask "what will happen next?". I will not include any indicators, just price itself, the challenge is to try to deduce what will happen from price itself, trend lines, support and resistance etc.

For those that know how, draw in your trend lines or support resistance etc or anything else for that matter in paint or whatever graphic program you use, I know it is a little clumsy but it might be a nice learning exercise for all. Otherwise if you do not know how to do that, just write a description with what you see.

Ok next post contains today's chart, I will post the full chart on Wednesday.

Cheers
Akuma99

Full chart to come on Tuesday 11th of July.

WHAT HAPPENED NEXT?

http://img82.imageshack.us/img82/670...uestion6ld.gif

Ok, this sounds like fun (reminds me when I did a TA course). Havnt got too much time to analyse (at work), but quickly I see a major up trendline and minor down trend line (the red lines - converging support and resistance) to produce a triangle. Price has recently penetraded the upside of the triangle, with a long white candle, followed by a bearish black candle. Price has managed to touch (and penetrate) the long standing resistance level (blue line) that was previously tested several times before penetration. Since price has yet to close above the resistance, I would be hesitante to go long. Linkewise I would not be looking to go short. Would probably put an order to go long a few points above the blue line with a stop a few points below. In addition, possible put a order to go short just below the red support line with a stop just above it.

Thats my two cents very quickly...
http://img80.imageshack.us/img80/281...led8ie1.th.png

I'd look to the higher time frame before doing anything as always . Might be a better entry. Bounced off the .618 retrace of an up move.

But if forced to trade off this chart, I'm diggin' a short right here at the .786 of the W Gartley, for a ride down to the .618 of the last part of the W, last swing up. Stop at the last high of the left part of the W. Good Risk Reward trade.

Using checkstar's chart I would follow the upward trendline which is still intact, so my bias is for LONG. I like trading trendline touches but since I missed this one I would wait to see if resistance is broken then trade the retest or next touch of the trendline.

Hm, Akuma should we reply on how we trade or what we think price will do next?

Based on fact that was unable to penetrate upside resistance but is making lower lows I would short it.

Sorry I need a new graphics program.

soso_beton, mostly on what you think price will do next, but most importantly, why you think it will happen. I know information is limited, but it can be a nice test of price reading skills.

This question is a harder call than most as most traders here might see a triangle but each of us would wait for a different time or a different level of resistance or support to be broken before taking our position.

Thus if you chose a moment (5 miute candle or 30 or whatever) that we were looking at to guess, only a small percent would be at the point where they would, in real trading, take a position rather than wait for confirmation they have learned in their own unique way to recognise.

Personally, I'll wait for the price action in reagard to the resistance line.
(see attached pic):

(I guess waiting is part of the game...)

Then...

Long - if the price breaking the resistance line.
Short - if the price fail to break the resistance line.

Hi Akuma,
This is my prediction. Me take long. Actually i just new here and on this bussiness. Read a lot of your articel ( some kind of your fan ).
But if this is my real trading with soo little information. My post is stay aside

Of course I acknowledge that a trade would not be opened on this information alone for most, but it can help to get a general feel for one timeframe before moving to the next, all the replies so far have been most interesting.

Man I love your idea more and more! How about setting something like 24H until you provide the answer? So we move a little faster to the next chart

Sure thing, Ill post the answer the same time tomorrow then

Looks like a possible Wolfe wave, the extention of the 1-4 line representing the target. Although this is way too late to trade it. If it was traded theoretically it should have been traded at the hammer at point 5 and stop would have moved to to BE. and some profit taken by now.

At this point we would now look at PA at the 2-4 line see if it will continue it move to the target or stall.

SilverB

Nicely spotted there sliverb , I didn't notice that, the benefits of this idea is already being seen, garlty's, wolf waves, triangles ... you can see the many different methods.

What I don't like is the last candle gapping above the previous long white candle and then failing to follow through. It seems like the bears took over on that last candle and it wasn't able to close above a resistance line. Instead it closed at the previous day's close and looks a bit like a bearish counterattack. I would get out of any long positions but wait for further confirmation before taking a short position. Also, I think if it does turn around and penetrate up through that resistance line it will really take off, but my guess is it's headed down.

Thoughts of a newbie ;-)

This is a bundle of fun, Akuma. Thanks for posting it and I really hope you continue to do this!

Squid

A newbies work is never done

Akuma, Thanks I need the practice. I am feeling drawn to patterns which have a zone where I can look for PA reversal. I find Gartleys hard because you need have a lot faith in the pattern as often there is no classic s/r level to trade off, but rather use fib projections/retracements. Wolfe Waves are based around more classic concepts of channels and trend lines. Which I find easier phsycologically to trade.

What about TD sequential. I blew up the image to do a count.
Red numbers 1 to 9 are TD setup.
Blue Numbers 1 to 13 are TD countdown.

TD Sequential is complete when a we get to a countdown 13 which closes below the close of countdown 8.
The the 2nd bar marked 13 qualifies. We then get a hammer, and a few bars later we ge a price flip indicating
entry.


So I'd say things look bullish, but once again price has moved too far for entry.

SilverB

The goal of successful trading is not to predict but to follow the market and to stay out when it is whipsawing.