Tag Archives: Trend

Trend Change Study

 

Do you ever experience the joy that comes from watching a price sequence develop and feeling that it is just technically "beautiful"?

No? Maybe it's just me.

But I do really love this sequence.

And I think it is a good one for those new to the YTC Price Action Trader methodology who might still be getting used to the ideas of strength and weakness analysis.

Sorry for those who don't have the YTC Price Action Trader. This article won't be relevant. We'll get back to usual programming next week!

Here's the price sequence we're going to study:

<image: Trend Change Study>

Click here if you wish to open a larger chart image in your browser. Or right click to download.

Pattern traders call this a Rounded Top.

For me, it's a transition from Uptrend to Sideways Trend (very briefly) and then into Downtrend.

But what makes it great for review is the fact that the whole transition occurs in slow motion, with gradual changes from swing to swing, rather than a sudden and dramatic break of structure.

Price just rolls slowly over from Uptrend… to Sideways… and to Downtrend.

So… study time!

A primary aim in my own personal trading is to get "in sync" with the price movement. This is not just assessing the trend direction as up, down or sideways. But at a deeper level, aligning myself and connecting with the underlying bullish or bearish sentiment within the trend. The result being a strong sense for whether the trend itself is stable, or perhaps weakening, stalling or at risk of reversing.

The aim of this exercise: To start developing these same skills through studying a reversal price sequence, identifying the signs within the swing structure that could have helped you sense the trend weakening and rolling over eventually into a new downtrend.

Please note: (a) Our concern is NOT with how this structure might be traded. Just with keeping yourself aligned with price as it flows. (b) And while we recognise that we're missing the "feel" that comes from watching this occur live, there is still value for new traders in historical chart study. Knowing what to look for is step one. Then we progress to learning to see it unfold in real-time.

Let's go:

1. Examine the price swings as they move from start to finish, using only one single method of strength and weakness analysis at a time.

(a) Momentum slope – bullish swing comparison

(b) Momentum slope – bearish swing comparison

(c) Projection

(d) Depth

Take note of any signs that each method might offer, alerting you to a weakening of the uptrend and gradual rolling over into a downtrend. (Noting of course that not every swing gives clear evidence of change. You're looking for gradual changes across multiple price swings.)

Now let's try to make it a little more realistic…

2. Real analysis, conducted in real-time at the hard right edge of the charts, actually considers all methods of strength and weakness analysis as a whole. So this time, step through the chart swing by swing and let all four methods create a "picture" in your mind. Allow yourself to feel the uptrend weakening, rolling over to the sideways. And then again rolling over to a downtrend.

If you want to review the text first, refer to sections 3.3.1 and 3.3.2 (pages 113 to 144).

If you have a couple of hours to spare you may feel like replaying the sequence (NQ, 3rd June 2019). But for those of us with better things to be doing on the weekend, simply stepping swing by swing through the chart from left to right should provide sufficient learning opportunity.

Happy trading,

Lance Beggs

 


 

First Pullback in a NEW Directional Trend

 

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

REFERENCE: Definition of a sideways trend – Vol 2, Ch 3, Pages 99-102

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

<image: First Pullback in a NEW Directional Trend>

Not all trade setups are equal.

You need to collect and review your stats to determine which setups provide your A+ MUST-NOT-MISS potential opportunity of the day.

For me, the first pullback in a NEW directional trend is one of these MUST-NOT-MISS setups.

No, they do not always profit. And sometimes they offer profits, but I mismanage the opportunity.

But when they do run and I perform well enough to catch them, the profits can more than make up for any other failed attempts. As always, we profit over a series of trades. Individual trades are irrelevant.

Check your own charts, in your own market and timeframes. Note any sideways trend environments. Find a breakout which occurs with some strength, which holds the break. And see if you can also find edge on the first pullback into this new directional trend.

Happy trading,

Lance Beggs

 


 

Trading the Edges of a Sideways Market

 

When the market is stuck in a sideways trading range, the primary place to look for opportunity is at the upper and lower edges.

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

<image: Trading the edges of a Sideways Market>

When the market is stuck in a sideways trading range, the primary place to look for opportunity is at the upper and lower edges.

Important References:

Sideways Trend definition: Volume 2, Chapter 3, Pages 99-102

3rd & 4th Principles of Future Trend Direction: Volume 2, Chapter 3, Pages 145, 149, 150

BOF Setup: Volume 3, Chapter 4, Pages 28-31

LTF Pattern entry: Volume 3, Chapter 4, Pages 86-93

Happy trading,

Lance Beggs

 


 

Trading an Uncertain Trend

 

The YTC Price Action Trader provides clear definitions for a trend – uptrend, downtrend and sideways trend.

But despite this, there will be times where price action offers something that is not so easy to read.

One of these times can be immediately following a news release:

 

Trading an Uncertain Trend

Trading an Uncertain Trend

Trading an Uncertain Trend

Trading an Uncertain Trend

It would be great if the market was always smooth and easy to read. But it's not.

And that's fine.

The plan at times like this is simple:

  • WAIT until it is clear.

 

If you wish to make "Uncertain" an additional trend type for your trading, alongside up, down and sideways trends, then by all means do so.

But either way, the plan is to wait until it is clear.

STAND ASIDE completely. At least until price reaches the edges of the structure.

What do I mean by "the edges of the structure"?

It's the place where the market has potential to transition into something that is more readable. Something that does fit more nicely into the definitions of up, down or sideways trend.

Like this:

Trading an Uncertain Trend

Trading an Uncertain Trend

Trading an Uncertain Trend

Trading an Uncertain Trend

Trading an Uncertain Trend

Trading an Uncertain Trend

 

An important news release has the potential to completely shift the sentiment of the market. Sometimes the new trend structure is not completely clear, immediately following the news release.

If the trend is uncertain, WAIT until it is clear.

STAND ASIDE completely.

At least until price reaches the edges of the structure, where the trend will (hopefully) become more readable.

The same applies at any other time, outside of news releases. If the market is choppy and you just don't have a good read, it's fine to declare it uncertain. Zoom out on the chart and identify the edges of the structure. Where are the upper and lower zones which might offer some clarity as to what is happening from then on. And stand aside until price reaches these zones.

It's ok to not know. "Uncertain" can be a valid trend type.

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

 


 

When to Doubt a Pullback

I find the "grey areas" on a chart fascinating; the areas where our bias or premise start to show signs of breaking down and our decisions are clouded by the uncertainty that prevails at the hard right edge of our screen.

This is where real learning happens! Where your knowledge, skills and attitude are pushed just beyond their limits.

downtrend pullback

(more…)

Conflicting Trends on Different Timeframes – How I Read This Chart!

Here is some great email Q&A with a YTC Newsletter reader Thomas…

Question:

Hey Lance,

Hope you are well!

Got one question for you. Looking at the below 3-minute chart when would you say we went from uptrend to downtrend? I often have a hard time reading the market after a large move in one direction which then slowly starts grinding in the opposite direction. At first I look for pullback opportunities because the trend has not technically changed, but at some point in time it becomes obvious the sentiment has changed.

Your thought much appreciated.

Thomas

Chart:

(CLICK ON THE CHART TO OPEN A LARGER COPY IN YOUR BROWSER)

Reply:

(more…)

When Does The Trend Change?

The following chart sequence shows a great example of how I define a change of trend. The chart is a 1-minute chart of the 6B. The market and timeframe are irrelevant though. The concept applies to all markets and whichever timeframe you’re using to define the trend. I just happen to currently use the 1-minute chart.

As a background to the price action we see price in an uptrend leading into a resistance area between 1.5796 and 1.5802. Momentum clearly slows as price makes three failed attempts to breach the area (1 x test of resistance and 2 x breakout failures), before finally breaking the swing low between breakout attempts 2 and 3.

I call this break of the swing low the “objective” change of trend.

 

 

“Objective” refers to the fact that there is no discretion involved. Price traded below the swing low – there is no doubt.

However, for me, a change of objective trend definition does NOT mean a change of trend.

I define a change of trend as requiring two components:

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Where to Trigger Entry into a Pullback

Some more great email Q&A…

Question:

Hi Lance,

Had a question on breakouts. I know you subscribe to the breakout, then wait for a pullback to get in. I was monitoring GBP/USD last night. I set an alarm for if price got up to resistance at 1.5080. It then broke thru. Sticking to my rules I chose not to enter but to instead wait for a pull back. Which it did after first shooting up 30 pips or so. What I wanted to know is specifically how you play breakouts. That is, after the pull back…what triggers you in? Do you wait for another breakout,….perhaps on a smaller timeframe? Or do you maybe look for a pullback to a minor support area and then enter and NOT wait for momentum to kick back in in the direction of the breakout (that is, not to take out another additional high), etc.? Things like that. Because what I am doing now will involve more and more of entering after price breaks thru. And I want to make sure I play these right without getting burnt too often on false breaks.

Very much appreciate your thoughts on this.

A.

Response:

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