gaps reflect an instance when/where price is not tested and
accepted. Every time a price of a contract is bought or sold
that is a confirmation of that particular price. When the
market "gaps" it skips over price and so the general sense is that
as some future time that price "gap" must be filled. Or at
least that is the way I look at it.
Ok, then gaps represent a backlog of orders that could enter the
market at the break-even point and be forced to be used, or else
losses may ensue. I am not sure how much demand there is to sell at
the break-even point -- lest losses would be incurred -- among the
professional traders. But the intent is clear : to force to sell
(for a gap down) or to force to buy (for a gap up) in order to have
no free riders for the move in the opposite direction. It is
similar to running stops of top- or bottom pickers. This explains
why wave 2's turn around at the gap areas which are part of wave 1.
Incidentally, this explains the purpose of wave 2: to clear the
majority of the orders (up to 78%, I guess), which were misplaced
or placed late, before resuming a trend. Then the purpose of
wave 4 is to force the majority of orders to sell prematurely
rather than at the point of completion of wave 3. The purpose of
wave 5 is then to force to sell those who entered the trade
prematurely anticipating a reversal.
This whole thing makes sene to me now. Thanks for feeding me
with relevant information.
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not sure if I'm right, but .....
SPX 30 min chart and video
Posted by tahoe on 22nd of Jan 2010 at 10:02 pm
gaps reflect an instance when/where price is not tested and accepted. Every time a price of a contract is bought or sold that is a confirmation of that particular price. When the market "gaps" it skips over price and so the general sense is that as some future time that price "gap" must be filled. Or at least that is the way I look at it.
Ok, then gaps represent a
Posted by junkie on 22nd of Jan 2010 at 11:13 pm
Ok, then gaps represent a backlog of orders that could enter the market at the break-even point and be forced to be used, or else losses may ensue. I am not sure how much demand there is to sell at the break-even point -- lest losses would be incurred -- among the professional traders. But the intent is clear : to force to sell (for a gap down) or to force to buy (for a gap up) in order to have no free riders for the move in the opposite direction. It is similar to running stops of top- or bottom pickers. This explains why wave 2's turn around at the gap areas which are part of wave 1. Incidentally, this explains the purpose of wave 2: to clear the majority of the orders (up to 78%, I guess), which were misplaced or placed late, before resuming a trend. Then the purpose of wave 4 is to force the majority of orders to sell prematurely rather than at the point of completion of wave 3. The purpose of wave 5 is then to force to sell those who entered the trade prematurely anticipating a reversal.
This whole thing makes sene to me now. Thanks for feeding me with relevant information.