Tag Archives: Market Structure

Trade Opportunity at Spike Highs

 

The market has opened and rallied. Not with great strength. In fact it's quite slow. But it rallies with a clear bullish bias.

It's clear of all S/R levels, above the prior day's high resistance (now support) and well short of the next higher timeframe resistance level.

Trade Opportunity at Spike Highs

Trade opportunity in such a case is ideally sought in the bullish direction.

YTC Price Action Trader readers – the first and second principles apply here and we're looking ideally for PB/CPB opportunity, with the trend.

However, there are times when I'll also look to take counter-trend opportunity, within this market environment.

Not always. But sometimes it's just screaming out to be traded. This is one of those times.

And not with any intention of catching a reversal. Just a scalp from the edges back to the mean.

Here's what I was seeing. We'll look at the TTF first, but we'll follow that up with the HTF chart, because it stands out better there and is much easier to see.

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Trade Opportunity at Spike Highs

Keep watch on the charts for anything unusual. Anything that is different.

It may just provide trade opportunity.

Happy trading,

Lance Beggs

 


 

The Key to Early Recognition of Potential Change in Structure

 

The key to early recognition of potential change in structure is in observing and identifying "SOMETHING DIFFERENT".

I absolutely love this example which has been building now since the beginning of the year.

The key to early recognition of potential change in structure

This does not mean that the uptrend will end.

It's just a warning sign.

A clue that the sentiment driving the market prior to this date has changed in some way.

A clue that there is "potential" for a change in market structure.

And for those of you who recognise this clue, the potential to more quickly adapt to any change in structure as it happens, or even before the technical change has occurred.

(By the time I publish this article the market may well have made this change. Be sure to check out the charts if you wish to see what happens next.)

For those of you who wish to join the ranks of professional traders, this is a skill you need to build. Quickly recognising and adapting to changes in the market.

And step one in that process is early recognition of "something different".

All markets.

All timeframes.

The key to early recognition of potential change in structure

I'm just stunned by that last fact.

Skip the table below if you wish, but I personally find it amazing!  (Yep… I'm a charting nerd!)

3rd Jan: Mid-Close Range 1st Feb: Mid-Close Bull 1st Mar: Mid-Close Bull
4th Jan: High-Close Bull 2nd Feb: Low-Close Range 2nd Mar: Low-Close Range
5th Jan: High-Close Bull 3rd Feb: Mid-Close Range 3rd Mar: High-Close Range
6th Jan: High-Close Bull 6th Feb: High-Close Range 6th Mar: High-Close Range
9th Jan: High-Close Bull 7th Feb: Low-Close Bull 7th Mar: Low-Close Range
10th Jan: Mid-Close Bull 8th Feb: High-Close Range 8th Mar: Mid-Close Range
11th Jan: High-Close Range 9th Feb: High-Close Bull 9th Mar: High-Close Range
12th Jan: High-Close Range 10th Feb: High-Close Bull 10th Mar: Mid-Close Bull
13th Jan: High-Close Bull 13th Feb: High-Close Bull 13th Mar: High-Close Bull
16th Jan: Low-Close Range 14th Feb: High-Close Bull 14th Mar: High-Close Range
17th Jan: Mid-Close Bear 15th Feb: High-Close Bull 15th Mar: High-Close Bull
18th Jan: High-Close Bull 16th Feb: Mid-Close Range 16th Mar: Mid-Close Range
19th Jan: Mid-Close Range 17th Feb: High-Close Bull 17th Mar: Low-Close Range
20th Jan: Mid-Close Range 20th Feb: High-Close Bull 20th Mar: Mid-Close Range
23rd Jan: High-Close Range 21st Feb: Mid-Close Range 21st Mar: Low-Close Bear
24th Jan: High-Close Bull 22nd Feb: High-Close Range  
25th Jan: High-Close Bull 23rd Feb: Mid-Close Bear  
26th Jan: Low-Close Range 24th Feb: High-Close Range  
27th Jan: High-Close Range 27th Feb: High-Close Bull  
30th Jan: Mid-Close Bear 28th Feb: Mid-Close Range  
31st Jan: High-Close Range    

 

(See here if you're not familiar with this form of candlestick classification – Parts: One Two Three Four Five )

The key to early recognition of potential change in structure is in observing and identifying "SOMETHING DIFFERENT".

In a stable trend, watch for changes in volatility, or in the pace of the trend. Watch for changes in the way that price swings project beyond the previous swing high or low. Or in changes to the depth of pullbacks. Or, as in today's example, watch for a sudden and strong move counter-trend.

In a stable sideways market, watch again for sudden changes in volatility. Or sudden and dramatic increases in volume. Or (one of my favourites) watch for signs of price compression towards either the upper or lower boundaries of the range.

Something different in the way that price has been moving.

Observe it.

Question it. What could it mean? Could this in any way provide a clue to a potential change in structure?

Now… watch and adapt.

The key to early recognition of potential change in structure

The key to early recognition of potential change in structure

The key to early recognition of potential change in structure

Happy trading,

Lance Beggs

 


 

Studying a Higher Timeframe Trap

 

There are some common themes that run through the articles I produce at YTC. One of these, which has been here since the beginning, is the importance of creating a Market Structure & Price Action Journal.

Every day, find something that amazes you in the charts. Print it out. Cover it with notes. Study it. File it. And review your journal often. It really will be the greatest trading book… EVER!

Over time, I promise you will start to see patterns within the market structure or price action, which repeat themselves again and again and again.

Like this, which we shared via social media way back in 2015:

What doesn't happen... is important information! 

This is a structural feature that I see repeated again and again and again.

Here's another previous example – http://yourtradingcoach.com/trading-process-and-strategy/trading-failed-expectations/

And of course, those with the YTC Price Action Trader should look to Volume 2, Chapter 3, Page 143.

But let's look to an example which occurred last week, on a higher timeframe chart.

Yes… it's an idea which you will find in all markets and all timeframes!

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Studying a higher timeframe trap

Happy trapping,

Lance Beggs

 


 

Start Your Session With IF-THEN Scenarios

 

Last Sunday I shared one of my old articles via social media.

Start your session with IF-THEN analysis

Click on the image, or this link here, if you wish to read the old article.

This is such an important part of my pre-session preparation.

Why?

It simply aims to get my session off to a good start – so very important for maintaining an effective mindset throughout the trading day.

This is not prediction. This is simply forward planning… developing “IF-THEN” scenarios based upon your assessment of the likely future price action.

If your “read” of price movement proves correct, you will have trade opportunity. If it proves incorrect, you stand aside and reassess.

This will ensure your actions in the market are pre-considered and your trades only occur when the market has confirmed your expectations.

And you will be less likely to be caught in a trap through impulsive reaction to unexpected price movement.

NOTE: What I am doing here with my IF-THEN analysis is NOT the same as the Game Planning / Hypos that you see other traders doing. Typically they're looking at much higher timeframes or Market/Volume Profile tools to determine a likely hypothesis for the WHOLE DAY.

I'm looking at the trading timeframe and where the market opens with respect to key levels, and assessing likely movement for the OPENING FEW PRICE SWINGS ONLY.

There is of course nothing to stop you using both. Whole session, higher-timeframe game planning plus opening sequence trading-timeframe IF-THEN scenarios.

It's just important here for me to point out the difference.

These are not meant to define the whole session. They just aim to get you off to a good start.

And from there, the picture keeps updating bar by bar in accordance with the YTC Six Principles of Future Trend Projection.

Anyway, let's look at my opening IF-THEN scenarios for the week to date, in the emini-NASDAQ (NQ) market:

Monday – 13th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Tuesday – 14th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Wednesday – 15th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Thursday – 16th February 2017

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

Start your session with IF-THEN analysis

So as we head towards the open on Friday, why not consider creating your own IF-THEN statements for the opening couple of price swings.

They won't always be right.

But when they are, it means that your actions in the market are pre-considered and your trades only occur when the market "makes sense".

And when the market offers something different, you simply stand aside and reassess.

It's all about getting your session off to the best start possible, through minimising emotional reaction to surprising and unexpected price movement.

Give it a try. You may just like the idea.

Happy trading,

Lance Beggs

 


 

Using Pre-Session Data to Confirm Levels

 

The following text and image were shared recently through both the YTC facebook and twitter pages.

  • My first action on Monday mornings upon opening my charting platform…

 

My first action on Monday mornings upon opening my charting platform...

Actually, it's one of the first things I do every day.

This is the key part we're discussing today:

Using pre-session data to confirm levels

Let's stick with the same timeframe but move forward to the market open at 09:30am.

Using pre-session data to confirm levels

Sometimes analysis of pre-session data offers nothing at all to confirm the relevance of previous session levels.

Sometimes it will allow us to invalidate these levels, when we see price slice through them with absolutely no reaction at all.

And sometimes, like in this case, it helps to validate a level as being still "potentially" significant.

Friday's low will be on my mind as I commence trading today.

Let's see how the opening sequences played out on the trading timeframe.

Using pre-session data to confirm levels

Using pre-session data to confirm levels

(If you're not sure what I'm looking for, see here to find out how I trade!)

Using pre-session data to confirm levels

Using pre-session data to confirm levels

Sometimes analysis of pre-session data offers nothing at all to confirm the relevance of previous session levels.

Sometimes it will allow us to invalidate these levels, when we see price slice through them with absolutely no reaction at all.

And sometimes, like in this case, it helps to validate a level as being still "potentially" significant.

If you prefer to trade with RTH data (pit session data) in order to take advantage of opening gaps, that is absolutely fine.

But at least take a quick look at the ETH data (overnight). See where it has traded with respect to the prior day. Where did it find movement quite easy. And where did it find did it find support or resistance.

This might just provide important information that can help once the opening bell has rung and trading has commenced.

Happy trading,

Lance Beggs

 


 

Trading the Retest of a Point of Structural Change

 

One of our aims in trading the financial markets is to make sure that we're trading in the right places on the price chart.

Places which make sense when viewed from the perspective of the psychology of the market participants.

Places which make sense when viewed from the perspective of the structure of the market.

Today we look at one of these places – the retest of a point of structural change.

We've addressed this concept briefly in the past. If you haven't seen this prior article you may wish to review it first.

http://yourtradingcoach.com/trading-process-and-strategy/retesting-the-point-of-structural-change/

The prior article summarised the concept as follows: 

Retesting the point of structural change

All examples in that article dealt with structural patterns on the trading timeframe.

But the same concept can be applied across a much larger time scale, with trade opportunity found as markets retest a point of higher timeframe structural change.

That was the idea behind the following trade.

We'll start by examining a much higher timeframe in order to see the structure develop over the prior four days.

Retesting the point of structural change

Volatility contraction is never fun to trade. Monday was slow and boring. Tuesday was worse.

But in the back of my mind at these times is an expectation that this volatility contraction must end at some stage.

And the expansion of volatility on a break from these patterns can provide great
trading conditions.

So let's move forward to Wednesday to see how the breakout eventually occurs. And to see whether or not it then offers us a nice BPB setup entry long.

Retesting the point of structural change

Damn! We missed it.

Or maybe not?

Let's move ahead 30 minutes into Wednesday's session.

Retesting the point of structural change

From a structural perspective, this is a beautiful place to be seeking opportunity long. Previous resistance often provides support once broken and retested.

From the metagame perspective, it's also a beautiful place to be seeking opportunity long.

Anyone with a bullish bias who missed the overnight breakout has now been gifted an ideal "second chance" entry opportunity.

Those already holding a long position have been provided an ideal scenario to add to their position.

And for those who managed to get short from the open on Wednesday, the market is at the ideal area for profit taking (ie. buy orders).

There is good reason to be buying here.

Let's look to the trading timeframe to see how it played out.

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Not All Sessions Provide Equal Opportunity

 

On Thursday morning I woke to find two emails somewhat related to the same topic – the challenging trading conditions we've experienced so far this week.

So my first thoughts were to expand upon a topic I shared via social media a bit over a week ago. Because I know that only a small fraction of you receive my social media posts.

And this one is important!

Here's the post which shows the daily chart for NQ as at the 1st of June. The same concept applies for ANY market.

Not all trading sessions provide equal opportunity

Let's first talk about what is showing in the bottom half of the image. And then we'll get to "what it means".

The daily chart overlay

It's simple to set up:

Setting up the Range Indicator

Setting up the Channel Indicator

Nice and easy.

And it gives an immediate comparison of the current days range versus the average over the last month.

So let's see exactly what prompted the email concern over challenging trading conditions.

The emails related to ES and CL, but I'll start by updating the earlier social media post.

This is NQ as at the time of writing, early on the 9th of June 2016:

NQ - low daily ranges so far this week

ES - low daily ranges so far this week

CL - low daily ranges so far this week

Of course, low daily ranges DO NOT necessarily mean a tough session. There are other factors involved as well.

But for many of us, who operate a strategy that requires price movement to profit, there's a high likelihood that narrow range days are those that get on our nerves.

Narrow range = limited opportunity = frustration!

Here's the thing though…

It's completely normal. Narrow ranges are a part of the game. And we need to learn to work with them.

We need to learn to profit over the longer time scale… comprising periods of both wider range markets and lower range markets.

The good news though, if you're stuck in a period of quiet markets and narrow ranges, is that it won't last. At some point the markets WILL move. 

So what do we do with this data?

1. Use it manage expectations.

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Let It Turn. Then Find Your Entry.

 

The best entries lean against some recent structure which limits movement against the position and provides a logical place for the stop.

Unfortunately though, the market cares little for what we want to see in an entry.

So how do we get in when there is no recent structure and we're trying to time entry to a market that is still pulling back against our expected trade direction?

Let's start with the Higher Timeframe Chart to get some context.

Let it turn. Then find your entry.

Let it turn. Then find your entry.

Let it turn. Then find your entry.

Let it turn. Then find your entry.

Let's go to the Trading Timeframe Chart now. And we'll move forward a little to see the rally up to the general setup area.

Because there are some concerns about exactly where we should be looking for the trade entry.

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I’d Take These Trades EVERY TIME. Here’s Why…

 

Win, lose or draw!

I'd be happy to take these trades EVERY TIME.

Let's start with some much higher timeframes to give you some context.

I'd take these trades EVERY time.

I'd take these trades EVERY time.

I'd take these trades EVERY time.

So there is good potential for strong directional movement below prior lows.

Any break to new lows… I'll be all over any BPB weakness.

And even better… if the market sets up right I'll try to enter short pre-break (above the low of day) to profit as price breaks lower. 

Let's look to the Trading Timeframe chart to see what the market offered.

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The First Loss – How Will You Let It Affect Your Mindset?

 

Last week's article led to an interesting comment about the sequence preceding the one discussed in that article.

Check it out here if you missed it – How to Enter When the Pullback Shows Strength!

The email feedback expressed an interest in the fact that the session started with a loss and yet I managed to quickly recover that loss.

  • "I particularly like the way you showed how you were wrong on the long but it did not affect your session, you focused on the price action projected, possible scenarios and continued to do your job."

So I thought we should look at this earlier sequence and see if there are any lessons available.

Let's begin with the trading timeframe, showing the price action which offered the initial loss and the subsequent two wins.

The first loss - how will you let it affect your mindset

Let's start by examining the LONG BPB trade.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

I'd love to be able to say I caught the SHORT entry as the breakout failed. But it was not to be. I was biased LONG. I was wrong.

Loss was minimised though. So this was a good trade.

Except for the fact that I've started the session in minor drawdown (which seems to be a habit lately!!!!)

Let's move on to the rest of the sequence.

The first loss - how will you let it affect your mindset

The first loss - how will you let it affect your mindset

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