Market Analysis and Trading Strategies

So if I look at a daily chart, what we're trying to do is ascertain the

likelihood of it being a up close or a down close day.

So I like to look for intermediate term and short term highs and s- intermediate

term or short term lows. And what I have here is I have this high

delineated, and I have this low, these highs up here, this

low. Now, I teach that, uh, when the market's not in a trending

model and/or a parabolic move up or down, the market's going

to work off of traditional support and resistance theory.

Now the problem is, is which support and resistance do we use?

So I look for the key turning points, the real obvious ones.

Now, you can use these short term ones in here,

but the main one is here because

the mar- the market moved from that low all the way up to this high,

consolidated, tried one more time to go higher, failed,

went lower.

Found some support here, found resistance, found support, tried one more time,

failure, the market moved higher.

So we're looking at the ebb and flow of how the market moves from a

point of

overbought to oversold to equilibrium and consolidation, then a new

th- move that would take us to an overbought

or oversold condition.

That's a range-bound market. The first thing I look for is,

are we coming off

of a run above an old high that may see it trade back below it,

or are

we trading below an old low that may see it trade back above it?

What I do is I look for these intermediate term price points and swing highs and

swing lows on the daily to see if we have moved above an old high,

because we

could very easily reject that and trade lower.

Or if we trade below an old low, we could see it come back above it

and stay inside

the previous determined range. So if we look for candles or

daily ranges that run above an old high, chances are we

could see it continue going higher, but we also have to be mindful

that we could

see an eventual turnaround or reversal, and it could start to go back below

that old high, 'cause this could be very easily seen as a

false break.

Same way with the old lows as we see here.

The market does in fact trade through it, tries to make a lower low, d- couldn't do

it, failed again, and then started to trade higher.

So we have to have these intermediate term swing points on our daily chart

because they're going to be potential reversal points, failing to follow through

after breaking an old high or breaking resistance,

or failing to make a lower

low and trend lower after breaking below old support.

So when the market's not trending, this is the scenario that it will typically

trade within. The market trades below these lows in

here, can't rally above,

and collapses. Trades below. It reprices all the way down below an old

low and then rejects, comes back into an area of consolidation,

then

rejects again. Expansion lower, finds a low, cannot

find momentum through it, consolidates around it,

tries one more time to go lower,

then trades higher. Every time the market breaks a swing high,

and

if we look to the left of that swing high, where's the next old intermediate term

high? This one here. So there's nothing for it to potentially

reverse inside of

until we get up to here. Once we clear this high here,

what's the bias?

Well, if you look at this little diagram I have

over here, this is gonna refer to

the previous day. Now, this could be a bullish or bearish day.

It doesn't make a difference. But when the market is bullish,

as we've outlined it

over here, we're gonna be looking for the previous

day's high to be the

target and the previous day's low to be supported.

In other words, there shouldn't be any movement below the

previous day's low.

It should all focus on the buy side.

That means reaching for the previous day's high.

When the market's bearish, this scenario would be reversed.

We would be looking for price having an inability to get above the previous day's

high and to seek the previous day's low.

Using this criteria here, okay, once we broke this candle's swing high

here,

the daily bias on this candle and this candle, and this is a Sunday,

we would

look for Monday as well, and then Tuesday we would look for

bullishness.

This particular candle right here is the one that broke the swing high,

and then we

know that we have a resistance level it could probably reach for.

So we're gonna be looking for the next day to trade, not to the previous

day's low, but to and through previous day's high.

So this next day, what's the daily bias? Here's the opening.

It's gonna wanna reach for this high, so where is it wanting to go? Up.

So what are we gonna focus on? Previous day's high.

'Cause it's bullish, it's wanting to go higher.

Now we have yesterday.

This is what this... on this candle's date.

The market opens, and we're gonna see it trade through

that and with the

anticipation it's gonna eventually try to reach for this daily high.

The market closes in the middle of the range. Here is Sunday's trading.

Then Monday, the same phenomenon.

You would look for the market to want to trade through what?

On Monday, we would look for this previous Friday's

low to be supported, and

we would look for price to run through previous Friday's high.

Monday, we see it open here. A little bit of movement above it,

but it does in fact

pierce Friday's low, and it comes back and closes where it opens.

So is there any significant change in the underlying direction? No.

Did we trade to this high yet? No. So we take that same premise, and

we see it open here. So what's the bias? We're looking for the previous day's high.

Why? Because we have yet to trade back to this

old resistance level.

Market opens here, trades up, trades through it, but look what it does.

It comes right back inside the daily range.

But as we're reaching for these intermediate term levels on the daily

chart, we're

factoring in, does it have enough range to reach for it

above or below?

And then we take that approach and apply it immediately to the previous

day's high

and low, as we have here. And what you're determining is, is

if we're bullish,

we're gonna be focusing on the previous day's high for momentum.

And when we're bearish, we're gonna be focused on the previous

day's low for

momentum. Very rarely do you see both sides of the

previous day's candle

tagged or traded through. If it does, it's usually indecisiveness or

it's going to be a reversal soon, and they're clearing the board on both

sides of

the marketplace. And when you start seeing those types of

things, get prepared,

because the market could be, in fact, about to reverse.

You can see that actually happening here. Previous day's high and low here.

The next day it trades through it, and its low is violated too.

So we're about to see a reversal. Next day, reversal.

This is called an outside day, when you have a previous day's range

that's violated

with the pr-- Uh, well, this is an example of it too.

This high is ninety-three ninety-eight and the low is ninety-three sixty-seven.

This candle's low is ninety-three fifty-eight and the high is ninety-three

ninety-nine, so this is an outside day with a down close.

That's typically bullish.

Reason why it creates a false break above the previous day's high and then closes

on the low, if we're in a bullish market overall

and that occurs, generally it sets

up a really good buy scenario. But, uh, you gotta have a context behind it.

You can't just take a outside day with a down close and just naturally assume it's

gonna be a bullish day. And my application of outside day is

when it does that,

it sets up a potential short-term reversal.

Uh, here's another scenario here, outside day.

We have the candle here, and then we can see the market does in

fact want to trade

higher as a result. So you won't always get the outside day at

turning points,

but I like to look for it because it builds a lot of confidence behind it.

And by using these tools, okay, and when the market also

breaks more or less, uh, a, a swing high of importance, and we have

a level that doesn't have anything else until we get to here, it's bullish.

Avoid this whole scenario, like looking at this high to this low,

pulling Fibs on

it, looking for optimal trade entry, you know, and selloff and all that stuff.

It's already shown a willingness to wanna go below this low multiple times, and

then it broke a swing high. So the momentum is bullish,

and that's gonna reach for

this.