It's been a while since I've done anything with this blog. Today however I want to share a look at the ticks. Why? For the purpose of education/thought sharing/inspiration - use it as you like. If some readers have never used the ticks or should confuse this with tick charts, I'm sure they can find lots of info here at IT.
First things first, here's how the Ticks looked on the 15th:
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Vertical lines are set at +/- 600 values using a 1 minute chart. These levels are based on the recent tick volatility, which from my experience is relative low compared to other periods. The -600 value is reached 3 times at 10:01 am, 2:37pm and 2:54pm(chart has 15:01 - being GMT +1).
On a 1 minute chart this period formed as:
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Notice how a clear reversal sets up at exactly 10:01 eastern. This is absolutely noteworthy and for two reasons. First the reversal in price actions correlates with the extreme tick reading of -600. Second the very bottom forms ~1 minute past 10:00am eastern - a very significant time of the day. I will not go into further explanation of this here, but only mention how the significance of this reversal time can easily be seen going through charts.
After the 10am reversal a long uptrend leads through the day before market changes into a downtrend. Now when we study the correlation between the two charts we see that during the downtrend the ticks start to spike down until it hits the -600 reading just as it did in the morning. This time there is no abrupt shift in price right here, but notice how the trend changes shortly after. The very bottom of this downtrend is formed between the only two -600 readings.
So looking at this particular time period in hindsight we see that we could (at the very least!) have gotten an indication that a trend reversal was likely coming up. Furthermore we see a correlation between the two major turning points of the day, being the -600 tick level. If this last correlation is valid in general of course cannot be determined from this single day and it is a point I have not been looking into. That might the topic of a future blog post including thoughts as to why a such would/would not be valid and explainable.
Changing the setting from the 15th to the 18th, I want to talk about a different setup. First a quick market recap to set a context for price action: A relatively strong upwards move over night loses momentum and then starts consolidating which is the part of price action shown in the chart:
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The point of interest here is the second area marked in yellow. Technically this is the very signal that trend has become consolidation. Based on price action alone we see that the market will open in a consolidating market. Looking at the ticks again however will show a reading of almost -900 - a significant variation from it's prior range in +/-600 area. Afterwards the market quickly reverses up from this extreme tick reading.
Could the last example be interpreted differently? Yes definitely. For instance another perspective would be to focus on the market opening with a gap to the downside - arguing from gap theory that this would be the explanation more than tick readings. Furthermore a study of the validity of tick readings going into the open(versus intraday) might be worth itself.
Im my personal studies and trading, the time dedicated to ticks have been very limited. And for my active trading it's simply never used. Based on some of these recent observations however it's my impression that the ticks hold a strong potential in complimenting analysis of price action - thus the reason for this text.
Good Trading. Good studies.
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