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Pitbull setup Part II


To be honest I donot know if I will be able to articulate this but I will try. This is probably more of a concept then a setup and today wasn't the perfect day but I'll attempt it anyway. Some key ideas 1) many Market profile users and traders consider areas on a price that have not been traded at on the same day more than once to be areas of low volume ( You may need to study the Single print concept to really get this) but I have noticed on the one minute time frame that prices actually push away from other prices on High Volume and you will not see price bar overlap on the one minute....some examples from today may help...but you have been warned....

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You will notice on the far right of the screen that prices broke down on high volume...and left an area that was pushed away from rather quickly. Well the point of this post is to demonstrate that on many days these areas are tested as if the market particpants are saying " Hey, they broke it down from here before , lets see if they can do it again."....so from this chart you can see that the 1435 -1435.25 area was pushed away from fast. That being the case this High Volume area will need to be tested....so here is what happened soon after


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Notice how the market comes back up to test this area..

Later on in the day we get another push down on high volume here is a shot of that..notice the horizontal lines drawn at the 1429.75 - 1430.25 area..there is no price bar overlap on this high volume push..so the theory being that this area should be tested...here is the push down

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and here is the retest..
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I have found that these are excellent areas to trade for..I have also found that on trend days this counter trend approach will kill you.

These high volume areas also become dynamic support and resistence areas for the rest of the day quite often...so here are those high push areas and how they affected the market for the rest of todays trading....this is the entire day with those horizontal push out areas left in place

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Ask me questions if unclear as this is hard for me to put into words..it makes sense to me but we may need to view a few days before you can see what the H-E-L-L I'm writing about..

Bruce






Thanks Bruce!
Pt-Emini..this response echoes a question you asked about monitoring old areas...so if an area is unfilled on the same trading day then perhaps it makes sense that the next time the market returns to that unfilled area it may become support or resistence..or act as a magnet price in general.so today we have the unfilled area at about 82.50 - 85 doww...which we are close to ..anyone can scroll back and look at that area on a chart above in this thread.from Friday...so they will test to see if the buyers or sellers will return at those same levels to be rewarded again....just like a few MP concepts
quote:
Originally posted by BruceM

Pt-Emini..this response echoes a question you asked about monitoring old areas...so if an area is unfilled on the same trading day then perhaps it makes sense that the next time the market returns to that unfilled area it may become support or resistence..or act as a magnet price in general.so today we have the unfilled area at about 82.50 - 85 doww...which we are close to ..anyone can scroll back and look at that area on a chart above in this thread.from Friday...so they will test to see if the buyers or sellers will return at those same levels to be rewarded again....just like a few MP concepts



Certainly an idea worth investing a little research into. I did plot the bands on my ES chart as they developed. I also plotted a band in the late session, which turned out to be very close to the new VAH. I am noticing some of the bands end up very close to the new MP points at the end of the day.

I have a suspicion we might try to compare the bands with a volume profile at the end of the session and perhaps figure out how this all fits together. The thing I find most intriguing about this is how price will come back to and get stuck at the band. The bands seem to have a magnetic effect to them.
Bruce -

In drawing a new band on the chart, how far back in the price series (to the left on the chart) are you looking for a clear space (no overlap). For example, all the way back to the open, or the last N hours, or just the more recent bars visible on your screen ?

quote:
Originally posted by BruceM

and here is the retest just before 11 am....

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Bruce- in your initial description of this pattern you mentioned "I have found that these are excellent areas to trade for..I have also found that on trend days this counter trend approach will kill you."

I would suspect you can still draw the bands in the trend, but use them as a dynamic retracement level to look for an entry into the trend, rather than counter-trend trading. So using the chart example you show here, we could have looked for a confirming trend entry signal (Long in this example) once the band was touched and held.
Yes, I beleive the magnetic effect is the best part. It would also be useful to know how many days it takes to come back to "fill in" bands that aren't tested on the same day they are formed. We could also develop a matrix for days that they are filled in that could tell us how many S&P points on average the market travels away from the bands once they are formed before it reverses to come back for the retest..to fill them in..for example if 90% of the time we travel ( go above or below the bands )by 3 points before they are filled in on the same day then we'd be best to wait until we are three points above the band before we start selling etc..and possibly the data would point out the fact that if we go 6 points above a band area then it won't be filling in that day...so we could structure risk accordingly....just some ideas....I'm a discretionary trader but some of these ideas would be cool
quote:
Originally posted by pt_emini



Certainly an idea worth investing a little research into. I did plot the bands on my ES chart as they developed. I also plotted a band in the late session, which turned out to be very close to the new VAH. I am noticing some of the bands end up very close to the new MP points at the end of the day.

I have a suspicion we might try to compare the bands with a volume profile at the end of the session and perhaps figure out how this all fits together. The thing I find most intriguing about this is how price will come back to and get stuck at the band. The bands seem to have a magnetic effect to them.

all the way back to the opening bar if needed
quote:
Originally posted by pt_emini

Bruce -

In drawing a new band on the chart, how far back in the price series (to the left on the chart) are you looking for a clear space (no overlap). For example, all the way back to the open, or the last N hours, or just the more recent bars visible on your screen ?



Yes you could look for the long as the theory is that "whoever ran it up and away the first time might want to do the same thing and get rewarded again" What I meant by getting "killed" is that just because a band exists it doesn't mean they will come back for it so don't be blinded by them...If you get a good signal to trade for the retrace back,then take it. I have been caught thinking that they would be filled in without qualifying a signal to take a trade back to the area ..especially early on when I first started noticing these and as a person who sells rallies and buys breaks I was humbled fairly quickly....so in other words on trend days you may get many of these areas that form and they won't return to them...the good thing is that they can be used as targets if the market comes back another day or an area to initiate in the trend direction
quote:
Originally posted by pt_emini

quote:
Originally posted by BruceM

and here is the retest just before 11 am....

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Bruce- in your initial description of this pattern you mentioned "I have found that these are excellent areas to trade for..I have also found that on trend days this counter trend approach will kill you."

I would suspect you can still draw the bands in the trend, but use them as a dynamic retracement level to look for an entry into the trend, rather than counter-trend trading. So using the chart example you show here, we could have looked for a confirming trend entry signal (Long in this example) once the band was touched and held.

There exists currently a band from 1432 - 1431.25 on the charts...no chart posted here..at 11;40 A.M EST..So I am trying shorts at 1435.25 as I have 36 as a resistence number ( and 1439 above that) but hope you can see the current "band" as Pt- mini has labeled it...so 32 becomes first target then 31.25 and then if real lucky today down to 1429 area..but only if lucky...
It's important to note that this band originally started out at the 31.25 - 32.50 level and was test once already
Thanks DT, there is the 1445 officially hit in the day session. Seems like a good place for shorts with that gap down below....we'll see...there exists a band at the 41 area so that would make a good target if this market can get some steam together on the downside


Bruce


I had to edit this again as my own post made me laugh - Imagine a 4 point move is over half the average days range now and I say that you need "steam" to get to such a target. The bottom line is that these dimished ranges are pathetic.
quote:
Originally posted by day trading

Good market read!