Trends Within Trends

Click Here For Wyckoff Wave Chart 09-12-2014

Wyckoff students are very aware that there are several different types of trends.

The intra-day trend is measured from hours to days. The short-term trend is measured from days to weeks. The intermediate trend is measured from weeks to months. The long-term trend is measured from months to years.

Right now, the intra-day trend of the Wyckoff Wave is down. The short and intermediate term trends of the Wave are neutral and the long-term trend is up.

The trend is extremely important when considering a trade. The good Wyckoff student never trades against the trend. However, if the long-term trend of the market is up, there are still short-term opportunities to the downside. That was the case this week.

Let’s start with the intra-day chart. This chart of the Wyckoff Wave shows the individual intra-day waves that are created throughout the trading day. The intraday chart does not simply show prices and volume at short intervals. Therefore, these individual waves can be analyzed using the Wyckoff strategies and techniques.

The Wyckoff Pulse of the Market Charting Service presents the last 10 days of market action on the intra-day chart.

The Wyckoff Wave had rallied to the top of the trading range and then moved sideways. A look at the daily chart shows a reduction in both price spread and volume on the rally to point X. This was a preliminary indication that it would be difficult for the Wyckoff Wave to move into new high ground.

Returning to the intra-day chart, the Wyckoff Wave tried to leave the range to the upside at point L. An immediate test at point M showed demand was withdrawn and the Wyckoff Wave was vulnerable to supply coming into the market.

That happened and the Wyckoff Wave reacted to point N. This would indicate point L was an up thrust. That was confirmed with secondary tests at points I, K and M. Note that each had a lower top and there was a lack of demand on each rally.

The Wyckoff Wave then reacted to the bottom of the trading range and rallied to point Q. Even though the reaction to point P penetrated the support, the lack of demand on the rally to point Q indicated this was not a spring. The same is true on the reaction to point R.

Instead the Wyckoff Wave confirmed the secondary test with a series of lower tops and lower bottoms. This enabled the drawing of an intra-day down trend channel. The supply line begins at point O and runs through point Q. The parallel support line begins at point P.

The poor quality of the rally to the top of the range had indicated the Wyckoff Wave would react and the daily Wyckoff Market Letter had recommended taking short-term positions to the downside. The upthrust confirmed that recommendation.

The Wyckoff Wave appears to be headed back into the trading range to continue its sideways movement.

Presently, there is a count of 1,100 points on the 100 Point & Figure chart. This gives the Wyckoff Wave an initial downside objective of between 40,700 & 40,800. This is in the area of both the support line on the daily chart drawn through points M and Q and the halfway point of the rally from point W to point Z.

If the Wyckoff Wave puts in an intra-day last point of supply, the objective can be adjusted to reflect the additional count.

Many Wyckoff students who took short-term positions and are now enjoying some initial profits also maintain long positions in their portfolio. These are intermediate and long-term positions to the upside. It just shows that Wyckoff students, if they understand the different trends, are able to maintain both long and short positions at the same time.

Marlene and I would like to thank you for the multitude of comments and e-mails we received this week. It was very special and deeply appreciated.