Trade the Market Bar-by-Bar
Being able to tade the market bar-by-bar can add exceptional value to the trader, even if that trader uses indicators like moving averages, MACD, and the like. With some study and practice, price action can help the trader determine the likely next move of the market. Let’s look at the recent price action in the S&P e-mini futures (ES) that led to a swift and large decline. We’ll see not only where the trade took place, but also how to anticipate the trade setting up well in advance of the actual entry.
The S&P e-mini futures is one of the most popular and most liquid markets traded, and it trades nearly 24 hours a day during the trading week. Although the volume remains markedly lower during the Asian and European trading sessions, the activity during these periods often sets the stage for excellent trading during the US session, when volume and activity rise.
Overnight Trading Sets the Stage
In this 5-minute chart of recent market action, the S&Ps had gone into a trading range in the two and one-half hours before the US session opened. This is marked by solid blue lines on the chart. During the Asian session, the market also put in a high which is depicted by the dashed black line. Simple trend lines like these call our attention to locations of known supply and demand. When the market revisits these areas, we can evaluate how the market is likely to act once these areas are reached.
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