Analysis 2024-01-11 18:10
Analysis 2024-01-11 18:10
pre market info
News : 16h Michigan consumer sentiment
8H : res: 46,000 / sup: 40,000
5min : DT to 40,000
1 min : price stag at 14:30 then at 15:00 starts to fall
to reach a new stag at 15:30
Study of the stag
The stag started at 1530 and finished at ~17:20 (1h50min)
What we're interestd in here is to see what are potential
clues that we have reached the bottom or the top of a stag.
this is how the stag looks like in the 5 min chart.
the stag range is about 2 grids, we notice the increase of volume
and increase of true range. The question is, if we zoom in
using the 1min chart, do we have clues to when the price does
reverse inside the stag? This would give us nice entry points
wich nice R (risk/reward ratio).
Let's do a bit of stag anatomy on the one minute chart.
Here is the chart.
I've marked the start of the stag with "IN"
each bottom and top is numbered and the end of the stag is "OUT".
Now that we have all the information, were there clues to tell us that the price was about to reverse at each bottom/top?
Let's zoom in at B1,
At B1, there is a small spike of volume on the bid. Is it a sufficient sign to say price will turn? I don't think so, if we look at (1) we have a similar setup and
price keeps falling.
I would say we cannot conclude about B1.
T1 is a different story though.
T1 has double the total volume of B1, and Vask is much higher. The bar closes at top on the wall. V1.6/+3.
Then the price falls making this kind of scenario a potential clue for reversal.
Let's zoom to B2 now, any clue?
I cannot see anything on B2 that would indicate that the price would reverse there. Of course we reach the bottom created by B1 but it feels like a weak clue. I'd rather say that we have no way here to know there is a returnal coming.
At T2 though the story is different. There we have a spike of volume with Vbid high. V2.1/1.6.
The price closes just below the wall.
and the price reaches the previous top from T1.
We also have a spike in true range, just like with T1
Volume + Price + true range seem to tell us
something is about to happen.
T1 and T2 have a similar scenario and as such may mean we have a nice clue about price
about to reverse.
Let's continue now to the third wave of our stag.
Before the price reaches B3, we have a stag
area with several spikes of volume with the bid being higher, yet the price does not seem to be breaking the grid down (price stays above the dotted horizontal line).
This may indicate that a reversal is coming?
The fall of volume during the stag + the fall of True Range would make a good entry point to buy.
Yet..
Price will fall to B3. Here B3 is extremely interesting for several reasons.
Volume is clearly on the bid: V1.1/-1.8,
despite the volume on the bid, the price did not go down! It went down, touched the wall at the bottom and went back up to it's starting price. This means market sellers despite their strength were not able to push the price down.
I call this kind of bar a "rocket". A rocket is when bar finishes close to the top while there is a high volume on the bid (which means we should expect a fall of price instead).
A rocket for me is a strong reversal signal. And here it works. The rocket is indeed a bottom for this stag.
After B3 we have a signal that we may be reaching the end of the stag overall. The price does not move up directly to T3, instead it almost retest B3.
This may be due to the fact that the price went from B3 to (1) quite fast with no transaction in the middle and some market participants think that the gap should be filled.
This is not so much important as to look at T3.
At T3, once again, high volume with volume on the ask. V1.4/1.8. Again a spike of TR. The same scenario as T1 and T2.
It's true that T3 is not the "absolute top" since the red bar just after goes slightly above T3 yet, the clue remains valid: price turns after this.
Here we may have a clue that this stag is going to exit downward: T3 is lower than T2
and T3 is on the white horizontal line which is round price (41,000 in our story). This would make 41,000 a potential resistance zone.
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