The Daily Market Forecast... real good reversals

Tuesday’s Blog Results: You did well! The suggested long level ran 17.25 points to the next level. Team Members saw the breakdown just prior which also ran for 17.25 points (see chart).

Today’s Trading Tip: Real good reversals.

Yesterday was about finding your style. Trading trends and finding reversals were used as examples.

You might be thinking that trading the trend sounds safer than picking a turning point. Not necessarily. Your initial priority is making sure your rule set has “edge,” meaning over time it’s profitable. After you find that the idea of “safe” becomes irrelevant. Just trade the strategy that appeals to you psychologically.

Finding high quality reversals is easier than you may think. There are many clues on a price chart where the impulse will turn into a correction. Here’s one you should study to get comfortable with trading reversals. After all, confidence in your strategy is paramount and the smart way to get confident is research, documentation, and review. Your success takes over from there.

Balance in the market. This is an area of ranging price that has high volume. Buyers and sellers were comfortable exchanging plenty of contracts (shares). This is also called Fair Market Value. Price will tend to continue when breaking out of this area. Price will also reverse when approaching this area.

That’s a beautiful thing! One rule set offers you both reversal and breakout trades. Look at yesterday’s chart above. The two cyan areas on the chart are high volume price levels from a prior trading day. Usually it’s the prior day but legacy levels are good as well.

  1. The first trading signal was a Failed Reversal. Knowing the rules of the strategy you were prepared to immediately take the Breakout if this failed.
  2. The Breakout was allowed to retrace back to your Volume Level where you entered short for a nice 17.25-point run to the NEXT Volume Level.
  3. The second Reversal saw the momentum end and shot right back to the upper Volume Level, good for another 17.25 points.

Three trades, two solid winners, 20 minutes of your day. For more details on trading Volume Levels watch this video. Better yet, join me in our weekly trade review session where you can ask questions, meet our team of traders, and watch us analyze every trade setup from the prior week. Click the button below.

Today’s Best S&P Futures Turning Points:

Short Level: Sell 4661.00 stop 4666.25 (5.25 risk). Same as yesterday.

Long Level: Buy 4579.25 stop 4573.50 (5.75 risk).

Trade Well,

Mike Siewruk

P.S. Join us every Saturday morning @ 10:00 ET for our weekly LookBack (5) trade review session. Every trade for the week is analyzed. Now open to the public. Meet the team. Ask questions. Register here for the December 4th session.


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