How come it popped?
Anyone? Anyone? The 1st issue on Compartmentalizing The Price Action, we saw the action down to the 30min chart. And for some of our scalper friends and people trying to figure out the action, says: “Hey Dawg? Why didn’t you look at this in the lower time frames like ticks?” What is Dawg’s reply? Dawg says: “How much have you read this blog?”
The thick yellow line going up is your leg up.
1. Is your 1st low. And the start where momentum starts to change.
2. Is your 2nd low. And where you confirmed the accumulation.
3. Shows your momentum was shifted from sellers to buyers..
Is this not accumulation?
1. Also shows you how the levels were respected. The 1st low retraced to the support shown by the leg up on 4/14/11 at 2:20pm est and was resistance back 10:00 am est that same day. And since it was the 1st test of this part of the leg, it popped at 5:20am on the 4/15. So far, very basic technicals.
After the pop, the price revisits 108.00 again. This level of support was hit a second time in the bearish progression that started when? 4/14 at 10:05am according to this 5min chart. Which eventually formed this Head n Shoulders pattern. Due to this bearish progression which has not confirmed the bullish progression that is has started, at 4am on the 15th, it will break through the 108 support on 2nd attempt and then take you to the next level of suppport (#2). Do you see the doji at 4/14 at 1:40pm est? And because this is the 1st attempt in the bearish progression, you will therefore pop!
3. Shows you how momentum was setup by the time we reach this second level of support. It describes how momentum produced an accumulation. This whole action progressed to produce a wide base. The base being the 1st and 2nd bottoms.
Dawg! Why does the 30min make it appear that the candles just burst through all the levels in between and here in the 5min, it didn’t seem that it did the same thing?
Since the draw from 109.31ish, the pop produced here will be 1st attempts to reclaim previous support. So all of those consolidations you see in the 5min starting at 109.10ish and then around 109.22ish is the market obeying the technicals.
Well how did this all look in the tick charts?
Huh? This doesn’t look like any of the timed charts. Do you know why it looks so … different?
I circled where this action that we’ve been discussing but where is the double bottom? Where is the Head n Shoulders? Did the Dawg switch screens on you?
The reason it looks different is…VOLUME!!!
Well you see time charts are time base candles. The tick charts are specific volume via tick base candles. So what can you deduce from the difference between the 5min chart and this 1600tk chart? LOW VOLUME Sherlock!! Now an astute chartist like AskBucky would call this pattern a cup. And those who follow this blog will also know that this is a bullish progression based on the momentum pattern.
Where is the accumulation responsible for the pop then?
Ye of little faith. Did the technicals behave the same manner in the lower time frame as they do in the higher time frame? You betcha!