Wyckoff trading method, page-1850

  1. 3,016 Posts.
    lightbulb Created with Sketch. 1899
    One thing I have found which may or may not be entirely correct is that consolidation/ trading ranges appear to be actively traded by some while at the same time be in an accumulation phase by others.
    How I look at these areas is that I divide the range box into sections half, quarter etc. there is usually at least one obvious level to use but sometimes more.
    I believe that the traders are buying in the lower zones & selling in the higher ones. There are obvious areas inside a range that can be looked at as buying or selling / profit taking.
    Some charts show very distinct buying / selling levels which appear to be verified by the volume & price bars, indicators trend lines etc.

    So working on that theory, if I had faith in my anaylsis & placed a buy order at or near the lower support line & if successful then calculated the amount of shares which I would have to sell to recover my stake at or near the resistance of one of the higher zones It should take away that "trapped' effect as the rest can be left to run or not.

    One thing I have also noted is that once a trading range has been defined some things nearly always happen.
    One is that the sp will retest the base, top and middle multiple times and that it is not smart to buy at the tops or middle if the sp is moving toward that level after hitting the target high. Better to wait for a break out & retest.

    The range size also gives a target which one could reasonably expect the sp to go to so a buy sell order can be placed with some confidence.
    When they do break out of the range the target is at least the size of the previous range & a minimum target is the half way point. The halfway point is often the spot where the sp will turn & retest the previous breakout line. The sp will also regularly move twice the size of the previous range.

    The zones are also great places to calculate the risk & for stops to be placed, particularly if trying to pick the bottom.
    I love trading ranges, & when applying a couple of simple indicators, in particular the stoch & one that will show divergences.
    Anaylsing the volume using Wyckoff methods is also a very good tool for verifying what's happening & in fact is probably the most important.

    Looking at my chart the volume anaylsis may not be exactly Wyckoff but it does fit with my expectations of price targets & what I was expecting to see at the pre determined levels of the range boxes and other trend, support & resistance lines etc.
    I am still not confident of my understanding of Wyckoff methods but everything helps in the end.
    Trading ranges.png
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.