Most of you guys probably heard of Fibonacci retracements, Fibonacci's arcs, Murray Math lines, etc.
Im giving it a shot on the Long term chart to decide overall trading direction and targets, for an overall picture of the market story..
Then deciding either to enter or to wait for a confirming signal (which i currently am )
My guess is that the ES is in the distibution phase, so im expecting either a close bellow the EMA21 on the daily chart, to enter short, or an Upthrust bar, indication of the likely end of the bull market....
What are your toughts?
check out the pic attached, sorry for all the colours and confusing lines (not at all the purpose of this thread of overcomplicating things lol)
BTW have i missed something these few days? any major discovery?
It is not unusual that range expansion bars define trading ranges. This happens when volatility slows down, so intraday you may look for this at the start of the night session and during noon break.
I use an indicator that autodetects these ranges. The trading range is a little bit larger than the range expansion bars, the optimum factor to be applied depends from the chart period chosen. The range ends, when a bar closes outside the expanded range.
The range is expanded to allow for stop hunting excursions. as many traders place their stops just above and below expansion bars. A stop hunting excursion is not a true breakout of the trading range, so the range remains intact.
For the night session usually a 30 min chart will tell a lot. For the noon session, which is shorter than the night session, a smaller period is better.
Below are two examples:
(1) 30 min chart of night session ES 03-10 of March 10: Price action stays in the upper half of the range and the moving average is rising -> expect a potential outbreak to the upside during the day session
(2) 5 min chart of price action of today -> looks boring, but certainly I do not expect a breakout to the upside -> market might simply continue to snooze
The following 3 users say Thank You to Fat Tails for this post:
Here is another comprehensive example, how to use expansion bars to define trading ranges. The indicator plots the trading range automatically
- by identifying a range expansion bar
- adding a small margin above and below for stop loss hunting
- letting the range intact as long as there is no bar close outside the range
Once the trading range is no longer active, the indicator will automatically look for the next trading range. Quite a simple approach, but effective as you can see below.
The example shows CL 04-10 from March 10 to March 12. The range expansion bar was the market's reaction to the weekly petroleum status report published on Wednesday, March 10. Afterwards CL 04-10 traded within the range generated by this bar. The range was autodetected by the indicator. Also note that the midrange first acts as resistance and then becomes support.