Time ▾ Price ▴ Research: Range

Showing posts with label Range. Show all posts

Wednesday, December 13, 2023

The Yearly Market Maker Breakout Template │ S&P 500 Index 2018 - 2023

S&P 500 Index - 2018 to 2023 (blue line = 3 week moving average)

In the Yearly Market Maker Breakout Template price expansion takes out

(1.) the High

(2.) the Low

(3.) the High and the Low

of the previous year's price-range.

Though price started expanding to the upside since the first week of 2023,

neither the high nor the low of the 2022 price range has been breached by mid-December.

2023 remains an 'inside' year.

S&P 500 Index (15 minute bars) - December 5 to 13, 2023 (golden line = 3 day moving average)

Price currently moving within a bullish Weekly Market Maker Breakout Template;

printing new daily, weekly, monthly and quarterly highs.

Price range of Wednesday, December 13 (FOMC-day), the narrowest since weeks - so far.

Sunday, August 20, 2023

Three-Push Reversal Patterns | Cameron Benson

There are a lot of varying opinions about how the market moves, such as the Wyckoff method, Elliott Waves, Stacey Burke Trading, Steve Mauro’s BTMM, etc. However, one thing that all of these methods and models have in common is that the market moves in three pushes.

In all timeframes price is always in some three-push pattern. Price develops in fractals, and everything happening on a higher time frame happens far more frequently on lower time frames. Be aware of Other Time Frame (OTF) traders, of previous monthly, weekly, and daily highs or lows. It helps us to identify liquidity areas. Where are the entry and the stop loss orders? Where is the money, at the upper or at the lower end of a range?

After the third push into one direction, price is going into consolidation. During the second push retail-traders believe that price is going to continue in the same direction, and everybody jumps in. This is the market maker’s trap to harvest entry and stop loss orders during consolidation. The third push is already part of a larger peak formation reversal pattern.

Al Brooks: Wedges and other Three-Push Reversal Patterns.

There are four different variations of the three-push pattern that can be observed on all timeframes:

          1.            3 Levels, also referred to as ‘stair stepping’.
           2.            3 Pushes:
                               a.   Stair Step.
                               b. 1, 2, Pause, 3.
                               c. 1, 2, 3.
                               d. 1, Pause, 2, Pause, 3.
                               e. 3 Burst Impulse Candles.
           3.            3 Pushes out of consolidation in any of the above listed variations.
           4.            Working Levels (3 Pushes)
                               a. Triple Tops.
                               b. Triple Bottoms.

Quoted from:
Cameron Benson (2023) - Decoding the Market Movement Algorithm. (video)

Three Pushes and Levels out of consolidation:
The Bearish and the Bullish Market Maker Cycle.

Stacey Burke (2022) - Best Trade Setups Playbook.

Al Brooks (2011-2012) - Trading Price Action: Ranges, Trends & Reversals.

Monday, January 9, 2023

External & Internal Range Liquidity | Auction Process & Institutional Order Flow

External Range Liquidity is the liquidity that will be resting on previous highs and lows (these highs and lows are also used to define the range), this could be in the form of stops or pending orders. While Internal Range Liquidity is the liquidity inside the defined range (External Range Liquidity). This could be in form of any institutional reference that we can use as entry such as order blocks, fair value gaps, volume imbalance, and more.

HERE

The first thing to do to be able to identify external range liquidity and internal range liquidity is to define the range you will be working within, using swing highs and lows to mark the beginning and end of the range. Choose the recent trading range relative to your specific time frame when defining your range.

External Range Liquidity can act as a draw on liquidity based on order flow, meaning if we have external range liquidity on the previous low and the institutional order flow is bearish, price will be attracted or pulled towards our external range.

Quoted from:
GhostTraders (Sep 15, 2022) - External and Internal Range Liquidity.


There are only three things price can do: 1. Breakout from a Range and Trend. 2. Breakout from a Range and Reverse (False Breakout or Stop Hunt). 3. Trading Range between Highs and Lows of sessions, days, weeks, months, quarters, years. HERE

Crude Oil ranges to break:
Inside Session, Inside Day, Inside Week, Inside Month, Inside Quarter, Inside Year.

The Marker Makers Cyclic and Fractal Price Auction Process is mirrored in Price Action:
Expansion is when Price moves quickly from a level of Equilibrium (50% of range).
Retracement is when Price moves back inside the recently created Price Range.
Market Makers look to reprice levels of imbalances that were not efficiently traded.
Reversal is when Price moves the opposite direction that current direction has taken it.
Market Makers have ran a level of Stops and a significant move should unfold in the new direction.
Liquidity Pools are just above an old Price High and just below an old Price Low.
Consolidation is when Price moves inside a clear trading range and shows no willingness to move
significantly higher or lower. Expect a new Expansion near term.

Wednesday, December 21, 2022

Range Extension & Contraction - Reversals - Time Cycles | Stacey Burke

Stacey Burke (Dec 21, 2022) - Cheat Code For The High and Low of The Year (Advanced Technical Analysis).

oOo

Old Baron Rothschild's recipe for wealth winning applies with greater force than ever to speculation. Somebody asked him if making money in the Bourse was not a very difficult matter, and he replied that, on the contrary, he thought it was very easy. "That is because you are so rich," objected the interviewer. "Not at all. I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this : I never buy at the bottom and I always sell too soon."

Jesse L. Livermore

oOo

Quoted from:

Edwin Lefèvre (1923) - Jesse Livermore - Reminiscences of a Stock Operator.

Friday, December 16, 2022

The Four Guiding Principles of Market Behavior | Momentum & Trend

Principle 1: Trend is More Likely to Continue its Direction than to Reverse

With price established in a clearly defined trend of higher highs and higher lows, certain key strategies and probabilities begin to take shape. Once a trend is established, it takes considerable force and capitalization to turn the tide. Fading a trend is generally a low-probability endeavor and the greatest profits can be made by entering reactions or retracements following a counter trend move and playing for either the most recent swing high or a certain target just beyond the most recent swing high. An absence of chart patterns or swings implies trend continuation until both a higher high and a higher low (vice versa for uptrend changes) form and price takes out the most recent higher high.

Be aware that recent statistical analysis of market action (from intraday to 20 day periods) over the last five years shows that mean reversion, rather than trend continuation is more probable in many equities/indices (as shown by more up days followed by down days than continuation upwards). For the current market environment, until volatility returns (as it may be doing now), this rule may be restated, “Trends with strong momentum show favorable odds for continuation.”

Principle 2: Trends End in Climax (Euphoria/Capitulation)

Trends continue in push/pull fashion until some external force exerts convincing pressure on the system, be it in the form of sharply increased volume or volatility. This typically occurs when we experience extreme continuity of thought and euphoria of the mass public (that price will continue upwards forever). However, price action – because of extreme emotions – tends to carry further than most traders anticipate, and anticipating reversals still can be financially dangerous. In fact, some price action becomes so parabolic in the end stage that up to 70% of the gains come in the final 20% of the move. Markets also rarely change trends overnight; rather, a sideways trend or consolidation is more likely to occur before rolling over into a new downtrend.


Three Things Markets do: 1. Breakout and Trend. 2. Breakout and Reverse (False Breakout). 3. Trading Range (High and Low).

Principle 3: Momentum Precedes Price

Momentum – force of buying/selling pressure – leads price in that new momentum highs have higher probability of resulting in a new price high following the next reaction against that momentum high. Stated differently, expect a new price high following a new momentum high reading on momentum indicators (including MACD, momentum, rate of change). A gap may also serve as a momentum indicator. Some of the highest probability trades occur after the first reaction following a new momentum high in a freshly confirmed trend. Also, be aware that momentum highs following a trend exhaustion point are invalidated by principle #2. Never establish a position in the direction of the original trend following a clear exhaustion point.

Principle 4: Price Alternates Between Range Expansion and Range Contraction

Price tends to consolidate (trend sideways) much more frequently than it expands (breakouts). Consolidation indicates equilibrium points where buyers and sellers are satisfied (efficiency) and expansion indicates disequilibrium and imbalance (inefficiency) between buyers and sellers. It is much easier to predict volatility changes than price, as price-directional prediction (breakout) following a low-volatility environment is almost impossible. Though low volatility environments are difficult to predict, they provide some of the best risk/reward trades possible (when you play for a very large target when your initial stop is very small – think NR-7 Bars).

Various strategies can be developed that take advantages of these principles. In fact, almost all sensible trades base their origin in at least one of these market principles: breakout strategies, retracement strategies, trend trading, momentum trading, swing trading, etc. across all timeframes.

Concept Credit for arranging the four principles:

Linda Bradford-Raschke (2000) - Swing Trading and Underlying Principles of Technical Analysis.

In: Rick Bensignor (2000) - New Thinking in Technical Analysis: Trading Models from the Masters.

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