Wyckoff Anatomyofatradingrange 6b1f5z

#TATip

By @HsakaTrades

Compiled by: @sacket2 from @hsakatrades twitter feed

Contents 1.

Supply & Demand.......................................................................................................... 3 i) Premise .......................................................................................................................... 3 ii) Types............................................................................................................................. 3 iii) Identification ................................................................................................................ 6 iv) Factors of Strength ....................................................................................................... 8 v) Trading .......................................................................................................................... 9

2.

and Resistance ............................................................................................... 11

3.

Swing Failure Pattern .................................................................................................. 14 i) Premise ........................................................................................................................ 14 ii) Identification ............................................................................................................... 14 iii) Trading (Entry/Stop) Entry: ......................................................................................... 15 iv) Miscellaneous ............................................................................................................ 16

4.

Trading Ranges ............................................................................................................ 19

5.

Divergences................................................................................................................. 20

6.

Trends and Reversals................................................................................................... 23

7.

Miscellaneous ............................................................................................................. 24

8.

Examples ..................................................................................................................... 25

9.

Explanation of Order Blocks and Breakers ................................................................... 32

10.

Tradingview Order Block Tip .................................................................................... 34

1.

Supply & Demand

A short primer on one of the most fundamental aspects of trading. i) Premise ii) Types iii) Identification iv) Factors of Strength v) Trading

i) Premise The primary reason price of any asset moves is because of an imbalance between supply (sellers) and demand (buyers). The larger the imbalance, the stronger the move. • • •

Supply > Demand: Price falls Demand > Supply: Price rises Supply = Demand: Consolidation

ii) Types There are several types of supply/demand zones, but broadly speaking they fall into two categories: • Reversal: Price rallies (falls), consolidates, and reverses to fall (rally). • Continuation: Price rallies (falls), consolidates, and continues to rally (fall).

iii) Identification As noted above, supply/demand zones always from during the consolidation (the base) b/w rallies and drops. Method 1 (Clusters): • Demand: Use the low of the base and the highest candle body. • Supply: Use the high of the base and lowest candle body.

Method 2 (Single Candles): More commonly known as order blocks (OB), you'd have seen these all over Twitter in the past few weeks. • Demand: A down candle before an up move that leads to a higher high.

•

Supply: An up candle before a down move that leads to a lower low.

iv) Factors of Strength a) Force of breakout: The more explosive the breakout from the base, both in of speed and distance of ensuing rally/drop, the stronger the buying/selling power at the base, ergo, the stronger the zone. Re: A clean move away, no wicks.

b) Freshness: The best reactions to a supply/demand zone will always be on the first return to the zone. With every subsequent retest of a zone, the supply/demand at said zone depletes, ultimately leading to a break of the zone. Some examples. Contrary to popular belief, with every subsequent test of a supply/demand zone, the said zone loses its strength. Soon, most of the orders in the zone will be consumed causing it to cave and give way to price.

c) Length and width of the base: The less time spent forming the base, the stronger a zone is, since that connotes the buy/sell strength out there is greater than its counterpart. A narrower base is stronger. Too many wicks above/below the base depletes supply & demand. d) Miscellaneous: • Reversal zones > Continuation zones • The best zones form around key high time frame or resistance levels • An exception to the supply/demand depletion factor is if there's an extremely important price from a fundamental/psychological perspective.

v) Trading Aggressive: Bid/offer the upper/lower limit of the zone with a tight stop loss below/above the zone. Conservative: Scatter your bids throughout the zone at various intervals and place the stop loss at idea invalidation. Note: Zone retest can be traded upon a break.

2.

and Resistance

The building blocks of TA: and Resistance Sentinel factors: • Recency • Number of touches (Violence + Time spent b/w touches) How I trade: • Buy last resistance when above • Sell last when below Note: This won't work always, look for confluence.

Exhibit A This was a high probability trade. Missed it, just saw the setup on going through the charts.

Exhibit B $NEO

$NEO Update No need to complicate your trading. Identify key levels, and plan your entry, exit, stop. Pull the trigger on the orders. Go lead your life normally.

3.

Swing Failure Pattern

Seeing a lot of traders use/abuse this pattern lately, thought I'll put up a small primer. Index: i) ii) iii) iv)

Premise Identification Trading (Entry/Stop) Miscellaneous

i) Premise The SFP is hinged on the basic idea that large players need equivalently large liquidity to fill their orders and avoid slippage by buying at the current market prices. Once they fill their orders, price usually reverts back. How do they achieve this?

ii) Identification Look for key swing points (/\ or \/) on a chart, swing high/lows that stand out instantly. When price breaks these points, two things will happen: a) Stops will get triggered b) Breakout traders will be baited This will create the large liquidity required.

iii) Trading (Entry/Stop) Entry: On the close of the SFP candle (the candle that breaks the swing high/low and closes below/above) Stop: Discretionary stop above/below the SFP candles high/low. Manually exit if price closes above/below SFP high/low. TFs: Any (I use the 4h/1D)

iv) Miscellaneous • • • •

Mostly applicable on BTC and large caps. This can also be used to identify range fakeouts. Check all exchanges to check if the SFP is consistent. Lastly: A wick below/above a low from 3 bars prior and a close above/below is NOT an SFP.

Exhibit A Well, this was timely. $BTC

Update. Although this worked out this time, it wasn't the ideal SFP due to the entry (candle close) being so far away from the swing point that was SFP'd This would be a 0.5R trade, which warrants a pretty high strike rate. For best SFP trades, look for small wicks.

4.

Trading Ranges

When scalping ranges, watch for fakeouts/SFPs/stop runs (Swing Failure Patter - Section 3) to make high probability trades. Whenever price fakes out of one side of a range, it tends to travel to other side. The recent $BTC range has served as a stellar example of this.

Another method, albeit a riskier one, is to divide the range into quarters (use the fib tool for this), and then bid the lower quarter and sell the upper quarter. This is riskier method since now you're preempting the way price responds instead of waiting for confirmation

5.

Divergences

Used to determine possible trend reversals (regular) or continuation (hidden). Bullish: Check lows Bearish: Check highs Line chart Match points vertically on price and indicator. Connect successive tops or bottoms (swing points) Regular > hidden.

Exhibit A Regular Bullish Div on $BTC.

Exhibit B Regular Bearish Div on $BTC

6.

Trends and Reversals

Uptrend: Higher Highs & Higher Lows. Break of an Uptrend: Lower low -> Lower high -> Lower low Downtrend: Lower lows & Lower Highs. Break of a Downtrend: Higher high -> Higher low -> Higher high Note: 3 swing points are required for reversal confirmations.

7.

Miscellaneous

Chart top to down (Larger TFs to smaller TFs). Move right to left (recency bias)

8.

Examples

Using previous Bearish Block to show @AureliusBTC made this.

$BTC 1D (08/04/18) - The day of Deribit. • 7200 nuked, • Expecting a short term bounce from this green zone + 1W level. • Reckon we'll see now lows on a clean break of 6650 (4h demand base) • Bearish until we get back intro the consolidation area prior to the pump.

$BTC 1D (08/05/18) Looking better than yesterday. • Found in the zone outlined. Clean break of this zone and I think this tests 6400. • Tweezer bottoms. • Some short term relief looks to be in order if it can hold this zone.

$BTC 1D (08/06/18) • Bounced off the equilibrium of the zone marked out. • If a bounce from here has enough momentum to break prior (7300), a case for 7.8k could be made. Otherwise, most likely price makes lower lows. • On a clean break of this zone, we see 6600s

$BTC 1D (08/07/18) Yikes, this is an ugly close. • Completely obliterated the potential bounce zone, establishing it as strong resistance now. • Last hope for any revival is the level at 6350. A clean close through that, and most likely BTC seeks new yearly lows.

$NEO One box rejeccs, the other proteccs.

$XRP Update Hit the first target. Holding 40% of spot buys. Closed Mex position completely.

$ETH False break + SFP (clearer on the 4h).

$ETH Watching this for now. Will include a top-down ETHUSD analysis with tonight's BTCUSD one.

Update This is consolidating longer than expected. Longer the consolidation, larger the liquidity builds above/below the range. Larger the liquidity, more violent the range breakout. We'll see some shenanigans nearer into the weekly close.

$BTC Top-down analysis (06/14/18) 1W Level protecc for now. Ideally close a doji/hammer above 6400 to set the foundation for a transient relief rally. A close below, and I think 6k won't hold for long, and we'll tap the demand zone equilibrium. Could wick below to liquidity land.

$ETH Box attacc. Bearish if close below the grey box.

9.

Explanation of Order Blocks and Breakers

A textbook example of a bullish breaker. Shoutout to @Tradermayne for showing me this voodoo stuff.

$BTC Scalp A breaker that could have been played (I'm flat right now). Used the OB equilibrium (midpoint) as the entry.

Another potential breaker (/Resistance flip) spotted. Throwing it out there to see if it does it's job (I don't think it will). If it doesn't, no biggie, nothing in TA has a 100% strike rate.

10. Tradingview Order Block Tip Had a lightbulb moment on a much more time efficient way to draw zones with their midpoints using one tool (fib retracement). No need to first use the rectangle tool to chart the OB, and then the ray for the equilibrium. Here's the template. (This may have been obvious to some.)