Well so far, we’ve looked at past cl moves. For the maroon, they don’t think anything of importance is being said because its after the fact. That is why they are maroons. So don’t be a maroon. There are a lot of info that is being packed in these short issues. What some people do is take pieces of info and try them out. Now what is really important for you to get is the progression. Buckets of progression occurs to do the setups that you see. Volume progression and price action progression. What historical data is good for is understanding the progression that occurred to produce the resulting price action. The price actions of the lower time frames follow the trend of the higher time frames. If it doesn’t, there is no trend.
Lower time frames have to work their way through all the levels of support or resistance that may not be evident in the higher time frames. Therefore, you will see the price action go up and down as a result of it. And due to those up and downs, momentum is being built up and lost to the upside or down depending on the direction. And depending on the type of level price encounters, will also determine the strength of the repulsion experienced at those levels of support or resistance. These lower time frame moves is what many traders and aspiring scalpers miss. They feel the pain when they enter, following the higher trend, the lower time frame stops them out going the opposite way to generate momentum toward the higher time frame trend. So after stopping them out, it goes their way. Those who fail to understand this claim the market is after them. Scream foul play. The problem would be easily avoided by understanding the lower time frame setups.
What else can we take from the previous issues? There are setups that occur as a result of accumulation and distribution. Price action can setup 1st touch situations once you can confirm the process of accumulation or distribution has started. This is a form of progression that you can track, very easily. This is why I tell you to track the leg’s relationship to the leg immediate to its left. It will help keep you in context to the larger time frame progression. It will also help you cash in on bigger moves. The support of the previous high, top of leg, is often a strong resistance. And the support just above the previous low, bottom of the leg, is often a strong support. Why? The explanation is easy. Generally is the spots that has not been tested by the accumulation or distribution process because its distance from the high/low. Ergo…first touch!
When contained within a leg, prices tested on other legs, does not count as first touch. Price is contained within the leg. The more significant thing to note, is how the leg you are working on relates to the leg immediate to its left to help you gauge your position in the larger progression.
In this example there are 2 legs. J and K. Both have tested the same price at 1 and 2.
1 and 2 are not related to each other. They are contained within 2 different legs and are mutually exclusive.
Now J and K are not mutually exclusive to the primary leg. K is the resulting progression from J. Because J is the first touch up the primary leg and K is the result of that first touch.
By request, I’ll delve on this a little bit more.
Here is a 512tk chart of cl.
From the low at 97.74, the leg we want to retrace up to is T1. We can break this up but we wont for now. The setup setup a W from here, where 97.74 is the new low on the right side of the W. Eventually leads to FT1-1, which is the Failed Test up to 1. We need to clear this segment of the T1 leg to move higher. Because there is a significant level here. We also did the same, but I didn’t mark it with 98.96, because that was a previous support. Then we come up to FT1-2. Eventually by 2:29pm est, we blow through T1.
Why did we blow through T1?
Because we’ve been accumulating through the down leg since 4:20pm est Monday. So T1 qualifies as a first touch. Simple as pie.
And that is all for this recap.
“Education consists mainly of what we have unlearned.”
Mark Twain