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Hi, M.A.

I've seen your post on ET and would like to learn more about WRB, WRB has some truth into it.

Here is a chart of Verizon stock which was traded on 1-29-10. I highlighted the WRB zone in blue box outline with green arrows pointing towards the candle.

Here is my interpretation of WRB just from what I heard and seeing. WRB represent a shift of demand and supply out of equilibrium. The body of the candle of the WRB could be use as support and resistance zone. Once price test back to the WRB zone we would fade if it goes with the dominant trend. I would like to think of the wide range body as price bias.

1. Am I reading the WRB right?
2. Would you go long on the third WRB in this chart once price retested the top of the body of the WRB when it acted as support?
3. Why does WRB act as S/R? How should I look at it?

Hi whaleboy,

First, for others reading my reply, WRB Analysis is applicable to stocks. In contrast, my own personal trade signal strategies are not applicable to stocks except for a few that are bonus trade signal strategies associated with the advance WRB Analysis Tutorial chapters 11 and 12.

Simply, WRB Analysis is the understanding of the price action prior to the appearance of any trade signals. Thus, WRB Analysis Tutorials are design to improve the performance of your trade signals. In fact, my own trade signals are not valid unless they appear within a WRB S/R Zone.

http://www.thestrategylab.com/TradingReports.htm

You said - WRB represent a shift of demand and supply out of equilibrium.

You're correct.

You said - The body of the candle of the WRB could be use as support and resistance zone.

Yes but not all WRBs can qualify as a WRB S/R Zone. The WRB Analysis Tutorials explains in detail which types of WRBs do qualify as a WRB S/R Zone along with in-depth explanation (objective rules) of the price action that qualifies a WRB as a WRB S/R Zone to remove any subjectivity.

You said - Once price test back to the WRB zone we would fade if it goes with the dominant trend.

You're talking now about trade signals via the use of the word FADE a WRB. I myself don't have any trade signal strategies designed to FADE a WRB nor do I know if such is reliable (never tested such a theory). In contrast, a special type of WRB called a WRB Hidden GAP does tell you a key change in supply/demand is going to occur soon. Thus, they tell you to be prepare if one of your trade signals do appear. Further, if nothing happens after that WRB Hidden GAP...that special type of WRB may then later qualify as a WRB S/R Zone. It's that WRB S/R Zone that can be used as a profit target or confirmation of whatever trade signals you're using.

WRB ---> WRB Hidden GAP ---> WRB S/R Zone

You said - I would like to think of the wide range body as price bias.

I prefer to view a single WRB in terms of volatility analysis as contraction / expansion. Thus, the price action prior to the WRB was contracting and then the WRB represents expansion out of that contraction. Therefore, a single WRB gives me no price direction bias unless it's involved with one of my personal trade signals.

You said - Would you go long on the third WRB in this chart once price retested the top of the body of the WRB when it acted as support?

The bonus trade signal strategies from tutorial chapter 11 and 12 gives no trade signal confirmation at/near the 3rd WRB you've highlighted on your chart. In fact, the bonus trade signal strategies for chapter 11 and 12 do not confirm any of the highlight.

With that said, I do intuition trades that are not valid trade signals but that occur within a WRB S/R Zone. Thus, I'm relying on my market experience (intuition trades) instead of my objective trade signal strategies. I would have taken an intuition trade about 5 intervals after the appearance of that 3rd WRB you've highlighted on your chart because that WRB and the price action that traversed to that 5th interval after the WRB represent one particular price action I like to trade when such occurs within a bigger pattern I see on your chart. Therefore, the WRB itself alerted me that a potential trade opportunity was near especially with it occurring within a bigger price pattern I see on your chart.

The point is that I don't see WRBs themselves as trade signals. I prefer to see what type of price action they are occurring within that helps define and explain the overall price direction.

You said - Why does WRB act as S/R? How should I look at it?

If a WRB qualifies as a WRB Hidden GAP and it that WRB Hidden GAP than qualifies as a s/r zone...it essentially becomes a key change in supply/demand. The reason for such that the price action represents institutional positions or large positions by pro traders. These positions have more changes in supply/demand than any other areas of price action you see on any chart. Then if/when the market returns to the price area of a WRB S/R Zone...the market reacts via either a price reversal or strong continuation price action.

Therefore, you should look at or use a WRB S/R Zone as a price area to look for trade signals via whatever trade strategy you're using. Simply, if trade signals appear not within a WRB S/R Zone...ignore those trades or lower your position size because they're higher risked trades.

With that said, just in case you didn't receive my email, you now have free access for 30 days with support to the WRB Analysis Tutorial chapters 1, 2 and 3 via your private thread (your eyes only) @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=94

If you have any log-in problems to your private thread that contains the WRB Analysis Tutorial study guide...do not hesitate to contact me via email or private message.

Best Regards,
M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
@ http://twitter.com/wrbtrader

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