As traders all we really need to know is when a market is going to stop moving in one direction then turn around and head in the other. The rest is noise. I try to concentrate most of my energy on identifying these times. The day trading information presented here is applicable to longer term position trading. Read on to learn what a market requires to make a turn.
Observation From Trading Notes:
"The rally on the last day before the big move has huge volume contracts on each swing up without much volume on the corrections."
This refers to the old observation that the early and middle parts of bull moves almost always contain big volume in the upswings and the volume dries up on the corrections. Even bottom formations contain this information and other clues if you look for them within chopping formations.
E-mini futures price corrections can have many, many forms. The idea is that they are limited affairs that finally end and give you the opportunity to get on board with the main trend.
For forecasting, the form and volume sync that e-mini price exhibits is more important than the distance traveled. Think about it. It's as if the form cannot hide itself from the signs of a new trend. The distance the e-mini futures contract travels will depend simply on how much power the participants have. It may move fast or slow. But in the early stages where you are looking to get on board with low risk, pay more attention to what an early bull market pattern of advances and declines looks like within a bottoming formation.
Each commodity marketplace has it’s own personality and it changes over time. Elliott wave theory can give you general guidelines, but it’s not enough. You must go the extra mile and find out what the current market personality is like. Then look for changes from the norm and watch for events happening out of character. This is a powerful technique. It is subtle and most commodity futures traders miss it, but the signs are there when futures markets are getting ready to turn.
Good Trading!
There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.
