Retracements and Measured Moves

First some notes on the Euro which looks like it might pull back from here, comments under charts:

Upside volume declining, Daily Doji at 10 Year VPOC

Euro was using prev days vpoc for support , now it is below prior VPOC for 3rd day in a row – thin to 50 back 1.2918, full retrace would be 1.2630

You have to respect the measured moves on ES – Some MM’s and retracements:

NOTE: the retracements got shallower and shallower.

Price broke outside of trend line. I am watching for another measured move using the last 70 pt move as a guide. If it retraces 50% then the MM target is 1500 – there I said it!

On the downside I am watching very closely to see if price gets back into the single prints. If so its down the slide to 1428/30 and maybe support at 1411.

On the next chart. Areas of relevance from yesterday:

1458.25 Dec 12 2008 NVPOC – was R on Thurs, bypassed on Friday, was R again on Monday. Overnight VPOC built at this area. Friday close is there also.

1450.50 Thursday Close was important support yesterday.

High volume built around 1451.5 yesterday.

November 2007 template – if price gets above 1465

Otherwise December 2007:

I copied this from an old post – I would add that a lot of the stuff I read about Fibs and Elliot waves is junk. The fib 123% and 162% extensions do look nice when they line up with important levels.

I dont really use on Fibbonaci numbers however they are close to 40-50-60% which are a sign of the health of a retracement.

A characteristic of a healthy bull market is that it makes higher-highs and higher-lows. This indicates a continual upward shift in expectations and the supply/demand lines. The amount that prices retreat following a higher-high can be measured using a technique referred to as “percent retracement.” This measures the percentage that prices “retraced” from the high to the low.

For example, if a stock moves from a low of 50 to a high of 100 and then retraces to 75, the move from 100 to 75 (25 points) retraced 50% of the original move from 50 to 100.

Interpretation

Measuring the percent retracement can be helpful when determining the price levels at which prices will reverse and continue upward. During a vigorous bull market, prices often retrace up to 33% of the original move. It is not uncommon for prices to retrace up to 50%. Retracements of more than 66% almost always signify an end to the bull market.

Some investors feel that the similarities between 33%, 50%, and 66% and the Fibonacci numbers of 38.2%, 50%, and 61.8% are significant. These investors will use Fibonacci Levels to view retracement levels.

Also important here: https://atoast2trading.wordpress.com/2012/02/24/larry-williams-long-term-secrets-to-short-term-trading/:

87 percent of the time we will close above the open if the dip from
the open to the low is less than 20 percent of the day’s range

15 percent time, we get these huge blast-off days if there is a dip
less than 10 percent

there is an almost zero chance of getting a large blast-off close above the opening if
price has dipped 70 percent to 80 percent below the opening

Large ranges give way, most often, to small ranges. Your objective is to establish a position in advance of large price change. It is a classic sucker play to see a market that has been hot, with large ranges for a day or two, pull in the public just before a sideways or congestion move. Most short-term traders are losers. The reason they are is that they go from one hot market to the next because they have no understanding of how the drunken sailor swaggers, how prices move across the great wasteland of their chart books. On the other hand, we who are the knowledgeable few, play just the opposite game. We look for markets that have been volatile in the past and are known for large daily ranges, but have recently produced small daily ranges because we know a large-range day is out there not too far away!

The rule is simply to buy on the open every Monday if that open is lower than Friday’s close.

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2 thoughts on “Retracements and Measured Moves

    • Thank you so much Michael, it is difficult to find many people who take the time to read to the bottom and leave a comment. Glad you liked the analysis, it seems to have worked pretty well so far.

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