Friday, June 1, 2012


Bounces :

a bounce scenario occures when price gets rejected of a pre definied key level area
wether it be of a support area or resistance .. or a swing igh/low..

it just m,eans that price gets rejected of a particular area.. and is seen as unfair.. this will cause nice trading scenarios where u can take advantege from,

on a bounce several points have to be met, inorder to take and play that bounce, but it depends if that bounce is anticipated from a supportish level or a resistance level.. ie a bounce to the up or downside,,

if that bounce should occure to the downside, then we have to look at resistance levels and if they hold and price refuses and gets rejected from the resistance level, then supply has to overcome  demand at this point to bounce off

else if the bounce should be upwards then we should move torwards(down) a support level wich should hold. ie due to demand getting stronger and outrun supply  or supply dries out to such an extend that demand is getting stronger .. at such a level wich causes the bounce...

for example in order to take a bounce trade to the DOWNSIDE, off a resistance level..
vice versa four a bounce to the upside offa support level

we should have following situations to be met,

1. path of least resistance should be down

2. selling pressure should be stronger then buying

3. supply should be stronger

4. corrections (buying) shoud be weaker.

so in order to judge a bounce setup and trade it , we want to see and wait how price moves torwards our key levels , now lets say for example we see how price moves torwards a key level  3,70 and price moves up to test / visit that level

so now we focus how price moves there and how it reacts @ thelevel ,
for a bounce trade worth taking we want to see in this case ,
that on the move up .. the buyng pressure and demand is reducing
and on the otherside that supply and selling is getting stronger..

so we want to see a weak price move torwards our key level..
and an increase in selling @ or arround our key level.. note that price may spike or trade one or two ticks above our key level but as slong as the demand and buying is still weak .. no need to rethink if we should play that bounce ( key levels arent fixed numbers but zones)

so we have traded @ 3,60 and removed that size on the backside.. but the follow thru aint so strong at the layside , we see an increase on the backside @3,7 signaling a strong resistance may be a head.. and if it looks like it will hold due to several actions we take the trade and antcicipate a bounce off that level..

we tarded at 3,65 and moved up again the follow thru is not really weak (relative.. but deff not strong either) and one or two orders dont change the whole picture/story

so price moved rather weak and at least with no signs of strenght to our key level.. and now lets watch some scenarios that could occure on such a level and how to spot them.. note that those scenariors can come up in various forms and sizes etc.. but u will start to see what to look out for..

Below a video of a Bounce :


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