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Marketstructure

These Market Structures Are Crucial for EveryoneIn this article, we will simplify complex market structures by breaking them down into easy-to-understand patterns. Recognizing market structure can enhance your trading strategy, increase your pattern recognition skills in various market conditions. Let’s dive into some essential chart patterns that every trader should know. Double Bottom / Double Top A double bottom is a bullish reversal pattern that occurs when the price tests a support level twice without breaking lower, indicating strong buying interest. This pattern often suggests that the downtrend is losing momentum and a potential uptrend may follow. Conversely, a double top signals a bearish reversal, formed when the price tests a resistance level twice without breaking through. This pattern indicates selling pressure and suggests that the uptrend may be coming to an end. Bull Flag / Bear Flag A bull flag is a continuation pattern that appears after a strong upward movement. It typically involves a slight consolidation period before the trend resumes, providing a potential entry point for traders looking to capitalize on the ongoing bullish momentum. On the other hand, a bear flag forms during a downtrend, signaling a brief consolidation before the price continues its downward movement. Recognizing these flags can help traders identify potential breakout opportunities. Bull Pennant / Bear Pennant A bull pennant is a continuation pattern that forms after a sharp price increase, followed by a period of consolidation where the price moves within converging trendlines. This pattern often indicates that the upward trend is likely to continue after the breakout. Conversely, a bear pennant forms after a sharp decline, with the price consolidating within converging lines. This pattern suggests that the downtrend may resume after the breakout. Ascending Wedge / Descending Wedge An ascending wedge is a bearish reversal pattern that often forms during a weakening uptrend. It indicates that buying pressure is slowing down, and a reversal may be imminent. Traders should be cautious as this pattern suggests a potential downtrend ahead. In contrast, a descending wedge appears during a downtrend and indicates that selling pressure is weakening. This pattern may signal a bullish reversal, suggesting a possible upward breakout in the near future. Triple Top / Triple Bottom A triple top is a bearish reversal pattern that forms after the price tests a resistance level three times without breaking through, indicating strong selling pressure. This pattern can help traders anticipate a potential downtrend. Conversely, a triple bottom is a bullish reversal pattern where the price tests support three times before breaking higher. This pattern highlights strong buying interest and can signal a significant upward move. Cup and Handle / Inverted Cup and Handle The cup and handle pattern is a bullish continuation pattern resembling a rounded bottom, followed by a small consolidation phase (the handle) before a breakout. This pattern often indicates strong bullish sentiment and can provide a solid entry point. The inverted cup and handle is the bearish counterpart, signaling potential downward movement after a rounded top formation, suggesting that a reversal may occur. Head and Shoulders / Inverted Head and Shoulders The head and shoulders pattern is a classic bearish reversal signal characterized by a peak (head) flanked by two smaller peaks (shoulders). This formation indicates a potential downtrend ahead, helping traders to identify possible selling opportunities. The inverted head and shoulders pattern serves as a bullish reversal indicator, suggesting that an uptrend may follow after the price forms a trough (head) between two smaller troughs (shoulders). Expanding Wedge An expanding wedge is formed when price volatility increases, characterized by higher highs and lower lows. This pattern often indicates market uncertainty and can precede a breakout in either direction . Traders should monitor this pattern closely, as it can signal potential trading opportunities once a breakout occurs. Falling Channel / Rising Channel / Flat Channel A falling channel is defined by a consistent downtrend, with price movement contained within two parallel lines. This pattern often suggests continued bearish sentiment. Conversely, a rising channel indicates an uptrend, with price moving between two upward-sloping parallel lines, signaling bullish momentum. A flat channel represents sideways movement, indicating consolidation with no clear trend direction, often leading to a breakout once the price escapes the channel. P.S. It's essential to remember that market makers, whales, smart investors, and Wall Street are well aware of these structures. Sometimes, these patterns may not work as expected because these entities can manipulate the market to pull money from unsuspecting traders. Therefore, always exercise caution, and continuously practice and hone your trading skills. What are your thoughts on these patterns? Have you encountered any of them in your trading? I’d love to hear your experiences and insights in the comments below! If you found this breakdown helpful, please give it a like and follow for more technical insights. Stay tuned for more content, and feel free to suggest any specific patterns you’d like me to analyze next!
Education
by ArShevelev
5
MARKET STRUCT USING ICT CONCEPTThe Inner Circle Trader (ICT) concept in trading, developed by Michael J. Huddleston, offers a comprehensive approach to understanding and navigating market structure. ICT emphasizes the importance of market structure, which refers to the organization and arrangement of various market components, such as support and resistance levels, trends, and price patterns. This approach involves identifying key levels where institutional investors might be placing orders, understanding liquidity pools, and recognizing the behavior of smart money. By focusing on these elements, traders can better predict market movements, identify high-probability trade setups, and manage risks effectively. The ICT methodology combines technical analysis with a deep understanding of market dynamics to provide traders with a robust framework for making informed trading decisions.
Education
by FrankFx14
Median Lines and Finding the Right Path When it comes to learning about markets and trading, finding the right path and committing to it is the hardest part. The right path has little to do with any technical analysis method. It has to do with structuring our mental framework so that we fundamentally change how we experience markets, trading, and loss. In the video, I show some Median Line and Action/Reaction work but this work is useless by itself. No tool is good or bad, they are just tools we use to comprehend markets. The problem arises when the tools start using us and we think there is some kind of magic to them. The essence of our strategy should be to structure our methods and mindset towards functionality. The journey we should commit to is one marked by fostering accountability and responsibility in all our actions. The swing trade Idea I show, takes method and structures it into function. Shane
NYSE:BXEducation
by ShaneBlankenship
2
Dynamics of Bull Market CyclesBull markets are the epitome of investor optimism and economic growth, characterized by rising asset prices and increasing investor confidence. However, within every bull market, there lies a cyclical pattern composed of distinct phases: Discovery, Momentum, and Blow-off. Understanding these phases is crucial for investors to navigate the market efficiently and capitalize on opportunities while mitigating risks. 🟣 Discovery Phase: 👉 Accumulation: During the accumulation phase, institutional investors and smart money recognize undervalued assets and begin quietly accumulating positions. This often occurs when the broader market sentiment is still pessimistic or uncertain, presenting attractive buying opportunities. 👉 Trend Emergence: As accumulation continues, subtle shifts in market dynamics become apparent. Prices begin to exhibit higher highs and higher lows, indicating the emergence of an uptrend. Technical indicators such as moving averages may start to show bullish crossovers, further confirming the trend. 🟣 Momentum Phase: 👉 Shake-out: The shake-out phase is characterized by short-term price declines or corrections that test investor resolve. Weak-handed investors, who bought near the end of the accumulation phase or are driven by fear, panic sell their positions. This phase often creates volatility and uncertainty but also offers opportunities for long-term investors to accumulate quality assets at discounted prices. 👉 Momentum Building: Following the shake-out, momentum begins to build as the broader market recognizes the strength of the uptrend. More investors start participating in the rally, driving prices higher. Positive news catalysts and strong earnings reports further fuel the momentum, attracting even more investors. 👉 First Sentiment: As the bull market gains momentum, investor sentiment shifts from cautious optimism to moderate confidence. Market participants start to believe in the sustainability of the uptrend, leading to increased buying activity. However, skepticism may still linger, especially among contrarian investors who remain wary of potential overvaluation. 🟣 Blow-off Phase: 👉 Renewed Optimism: In the blow-off phase, optimism reignites as investors regain confidence in the market's upward trajectory. Corrections or pullbacks are viewed as buying opportunities rather than signals of impending reversal. Institutional investors and retail traders alike re-enter the market, driving prices to new highs. 👉 FOMO (Fear of Missing Out): Fear of Missing Out becomes prevalent as investors fear being left behind in the rally. Social media, financial news outlets, and word-of-mouth recommendations amplify the sense of urgency to buy, further fueling price appreciation. This FOMO-driven buying frenzy can lead to exaggerated price moves and irrational exuberance. 👉 Euphoria: Euphoria marks the peak of the bull market cycle. Investors become irrationally exuberant, believing that the current uptrend will continue indefinitely. Risk management takes a backseat as greed overrides caution. Valuation metrics may reach extreme levels, signaling frothiness in the market. Understanding the cyclical nature of bull market cycles is essential for investors to navigate the market successfully. By recognizing the distinct phases of Discovery, Momentum, and Blow-off, investors can make informed decisions, capitalize on opportunities, and protect their portfolios from potential downturns. While bull markets are synonymous with optimism and prosperity, prudent risk management and a keen awareness of market dynamics are critical for long-term investment success.
Education
by Vestinda
2
The Wash and Rinse To See True Support/ResistanceTrue support and resistance is found in the meat of the move, not at the extreme highs and lows. To find it, Simply draw a zone or box and look for the place that price touches the most, and then pay attention to what happens afterward. In this lesson, I set up a trade plan and show how a Wash and Rinse structure at the pivot of a swing uses the most touches to find true support in a market. I then show how to identify it. The Wash and Rinse has a process that we can follow in real-time. 1. Multi-Pivot Line (MPL) 2. Zoom through the MPL 3. Come back and retest the MPL 4. Zoom back through the MPL the other way What happens in this process, is that buyers are holding some level. Price then busts that level triggering stops and at the same time encouraging shorts to enter. Then price rips back up essentially cleaning the book of orders and showing where the true support is (at least for the time being). Once you can recognize this structure, you can begin making your own observations and use these levels to read a market or begin to build a setup around it. The most important part is to learn to design a plan with objective rules around what you observe. Shane
NASDAQ:RCKTEducation
by ShaneBlankenship
2
Defining Target for Risk Reward: Maybe you shouldn't?The trade plan is broken up into parts. We have an objective and consistent entry, stop, and exit plan. Here I will be talking about the exit plan and setting targets that will give you a particular risk/reward ratio. There are no absolutes when it comes to what risk/reward you should be aiming for, a lot has to do with how you handle risk and loss and your overall understanding of markets. Defining the stop (risk) is relatively easy compared to defining the target (reward). Mostly you need a clean set of statistics on an objective method. This will give you an average distance that the swing will run in relation to your method. The reward part of the equation is a function of how far your stop is to your entry. There is no one-size-fits-all when it comes to trading. For many, it may be best not to set a target, but instead use something simple and objective like a moving average to exit the trade. This way, you get what the market gives you while incorporating consistency and objectivity into your exit plan. Keep it simple, objective, and consistent, and learn as you go. In the video, I make something up on the spot that may give you some ideas. I use a 20ema as a profit stop only after price has made a new high. It's simple, principle-based, and it's objective. No matter what your method, knowing where you are in the swing cycle will help in defining entry, stop, and target, and this will directly influence the risk/reward ratio. Shane
AMEX:IWMEducation
by ShaneBlankenship
2
What Is an Expanding Swing?Markets move in contraction/expansion. Small swings can be thought of as a form of contraction and the bigger swing is a form of expansion. An Expanded Swing is simply a reaction leg that is bigger than the previous reaction leg or legs. Its minor swings growing up to be major swings. This represents a change in behavior that often causes confusion among the shorts and the longs. The shorts are fearful cause the market is now backing up on them and the longs are fearful cause they see a market now turning up and getting away from them. This confusion creates an opportunity for those that are sitting back with a plan. To see this price action on a chart, it helps to have some simple and objective definitions for mapping the market and i show this in the video. First, we use market structure to read the market, and then we use a trading structure (trade plan) to structure the actual trade where we manage risk. Shane
NYSE:OIIEducation
by ShaneBlankenship
The importance of trading with the trend + Suppy/Demand zonesA trend can be defined with price action or indicators. Understanding that all indicators lag and price behaviour is key I prefer price action to tell me if we are up trending, down trending or trading in a range. Before understanding the basics of market structure it is important to know that its more likely for a trend to keep going on than for the trend to reverse. That is why professional traders look for areas to jump on the trend not areas to go against it. Also, keep in mind what time frame are you using to define the trend, for example, if your trades don't last more than an hour would you jump on the weekly chart trend ? what happens in 1 hour won't affect the weekly chart. So if you are trading the 5 or 15 min chart you can trade with the trend of the 1 or 2 hour chart. How to define the trend ? • An up trend is when price is making higher highs and higher lows • A down trend is when price is making lower highs and lower lows. • If there is no way to define the trend then you can say it is in a trading range with no clear direction. When has the trend changed ? To explain a trend change we will consider the chart below. First we can notice a clear up trend making higher highs and higher lows (1,2,3) then we create a new lower low (4) where we break below previous higher low (2) then price fails to create a new higher high and instead creates a lower high (5), finally when price breaches the previous lower low at (6) we can consider a change of structure. opposite situation happens in a down trend market. ABCD CORRECTION PATTERN There is a very common pattern that pretends to be a change of structure but really it is just a correction pattern to continue the uptrend. Look at the example below. An up trend creates a higher high (A) and a higher low (B). Then creates a lower high (C) and finally a lower low (D) before continuing its up trend. What did not happen that the trend didn't change ? If the high after (C) had been also a lower high and then it breaks below (D) and (D) acts further as resistance then the trend had changed. What is more important here is to understand that trading a continuation of the trend has a higher probability of working, on the example shown the correction ended right at a 4hr demand zone that was valid because the trend was still skewed to the upside.
CME_MINI:NQ1!Education
by FTWTraders
2
Market Structure Identification ✅Hello traders! I want to share with you some educational content. ✅ MARKET STRUCTURE . Today we will talk about market structure in the financial markets, market structure is basically the understading where the institutional traders/investors are positioned are they short or long on certain financial asset, it is very important to be positioned your trading opportunities with the trend as the saying says trend is your friend follow the trend when you are taking trades that are alligned with the strucutre you have a better probability of them closing in profit. ✅ Types of Market Structure Bearish Market Structure - institutions are positioned LONG, look only to enter long/buy trades, we are spotingt the bullish market strucutre if price is making higher highs (hh) and higher lows (hl) Bullish Market Structure - institutions are positioned SHORT, look only to enter short/sell trades, we are spoting the bearish market strucutre when price is making lower highs (lh) and lower lows (ll) Range Market Structure - the volumes on short/long trades are equall instiutions dont have a clear direction we are spoting this strucutre if we see price making equal highs and equal lows and is accumulating . I hope I was clear enough so you can understand this very important trading concept, remember its not in the number its in the quality of the trades and to have a better quality try to allign every trading idea with the actual structure
OANDA:XAUUSDEducation
by Snick3rSD
A guide to Profitable Scalping (why waste a price action)In the world of trading, many participants find themselves constantly waiting for the perfect confirmation for swing positions or entries, often missing out on the rapid movements that characterize financial markets. This is where the art of scalping comes into play, a strategy vastly different from swing trading, yet equally, if not more, compelling for those who master it because it offers way more opportunities to make money. In this blog post, I'll guide you through the essentials of becoming an effective scalper, focusing on market structure theory, the significance of Break of Structure (BOS), and the nuances that set scalping apart from swing trading. Understanding Market Structure Theory To excel in scalping, one must first be well-versed in market structure theory. This theory is the backbone of understanding how markets move and why they behave in certain patterns. It involves analyzing price highs and lows, trends, and ranges to predict future price movements. For a comprehensive understanding of market structure theory, this resource offers an in-depth explanation, it's not complete, but the best one freely available so I suggest you understand the content properly. www.youtube.com The Role of Break of Structure (BOS) A critical concept in scalping is the Break of Structure (BOS). When we observe a confirmed BOS to the upside or downside, it indicates a significant shift in market sentiment. The order block that caused this break becomes a focal point of interest. This is because, in the realm of scalping, these points often act as magnets for price, offering high-probability entry points. Capitalizing on Order Blocks Once a BOS is identified, scalpers must pay close attention to the order block that instigated this shift. When the price returns to this order block, a reaction is typically expected. This reaction is the bread and butter of scalping. Unlike swing traders who seek to capture larger market moves over extended periods, scalpers thrive in these quick, precise moments. Scalping vs. Swing Trading: A Different Focus The primary difference between scalping and swing trading lies in their respective focuses and timeframes. Swing trading involves holding positions for several days to weeks, aiming to profit from substantial price moves. Traders in this domain often focus on potential targets for a trade, analyzing broader market trends and economic factors. Conversely, scalping is a short-term strategy where trades last from a few minutes to hours. The focus here is not on the potential extent of a price move but, on the risk, -to-reward ratio. Scalpers typically aim for a 1 to 3 risk-reward ratio, meaning they risk one unit to gain three. This approach requires quick decision-making so it's much more involved than swing trading. Before we go on to see some examples following are the key things to remember to be effective in scalping To be an effective scalper, you need to: 1. Develop a proper Understanding of Market Structure 2. Identify High-Probability Order Blocks 3. Master Risk Management: Given the high-speed nature of scalping, managing risk is paramount. This involves setting strict stop-loss orders and having a clear risk-to-reward ratio for each trade. 4. Stay Disciplined and Agile: Scalping requires discipline to follow your trading plan and agility to adapt quickly to changing market conditions. Examples: Scalable OBs with results. This happened today: on SPX and NAS100 NAS100: SPX: How to pick an order block to trade for scalping: Entry for Scalping should be between 0.25 to 0.5 level inside the Order Block, you can use FIB tool to get these levels, this is highlighted in the Images above. 1. Do not go above 4h TF for this strategy. 2. Make sure Order block is caused a BOS 3. Notice the time frame of BOS, Pick the Order block in relation to the BOS timeframe. 4. Makes sure Prior to BOS the Order block resulted in FVG 5. Make sure the Order Block is not too big as it will result in greater risk, which I do not prefer. 6. If price does not hit your entry do not chase price, move on to next one. I want to emphasize here again , the goal of scalping is to capture the small move , not the whole move , so your focus should be one getting 2X or max 3X of your trade once , you do you get out and move on to next one , the good thing about this strategy is you can always find multiple assets where BOS is happening on anywhere from 1h to 4H TF. Finally, nothing in the world of trading is 100% so it's possible this may not work sometimes, which you should be okay with as long as it works more than 50% of the time. I n my experience it works more than 80% of the time. Conclusion Scalping is a dynamic and potentially lucrative trading strategy that requires a unique skill set, distinct from swing trading. By understanding market structure theory, focusing on order blocks following a BOS, and maintaining a disciplined approach to risk management, traders can exploit the rapid movements of the market for steady income. Remember, the key to successful scalping lies in quick, informed decisions and an unwavering commitment to your strategy. Like and Leave comment to this post to seek further clarifications if needed. Happy trading!
Education
by zakoraio
DKNG Market CycleAll stocks go thru 4 stages, sometimes each stage can last months or even years, and it's not always easy to recognize like it is on this chart. Stage 1: Accumulation - buyers coming in stopping the down fall, and the stock starts trading sideways. (Wait) Stage 2: Markup - Bullish phase, where traders and institutions start buying the up trend. (Buy) Stage 3: Distribution - where institutions and traders start taking profits - selling. (Sell) Stage 4: Decline - shorts recognize this stage and start shorting the stock. (Avoid)
NASDAQ:DKNGEducation
by tradepatiently
1
My Trading Strategy in 3 Steps 📊As per @TradingView 's previous post, in this article, I am going to share my trading strategy in three steps. 📌 Step 1: First, start from the higher timeframes like Daily/Weekly to identify the current long-term trend. Is it bullish, bearish, or stuck inside a range? If the price is sitting in the middle of nowhere, then it is a NO trade zone, as the price has a 50% chance to go either up or down. Thus, there's no edge! Remember: No trade is also a trade. 📚Wait for the price to approach the lower bound or upper bound. Then proceed to Step 2. 📌Step 2: Zoom in to lower timeframes like H1 and M30 to look for any reversal setups. A basic approach would be to wait for a swing low to be broken downward around a resistance as a signal that the bears are taking over. In parallel, wait for a swing high to be broken upward around a support for the bulls to take over. This would be the confirmation to enter the trade. Just like a sniper waiting for the perfect shot! 📌Step 3: Target at least a 1/2 risk-to-reward ratio. This way, even with a 50% win rate, you can still be profitable. Remember: We are risk managers, not traders. We can't control the market; the only thing we have control over is our risk. 📚Always follow your trading plan regarding entry, risk management, and trade management. Hope you find the content of this post useful 🙏 All strategies are good; if managed properly! ~Richard Nasr
Education
by TheSignalyst
51
MASTERING MARKET STRUCTURE : BOS, CHOCHBreak of Structure: This term is used in trading and technical analysis to describe a significant change in the price action of an asset. It occurs when the established pattern of higher highs and higher lows (in an uptrend) or lower highs and lower lows (in a downtrend) is disrupted, indicating a potential change in market sentiment and trend direction. Examples of Break of Structure: You can find examples of "break of structure" in both bullish and bearish movements. In a bullish scenario, a "break of structure" occurs when a new Higher High (HH) is formed, surpassing the previous High (H). In a bearish context, it happens when the price forms a new Lower Low (LL) below the previous Low (L), indicating a potential shift in market sentiment and trend direction. Shift in Structure : Sometimes, a "break of structure" leads to a more profound change in market character, referred to as a "Shift in Structure." This often involves a transition from a bullish to a bearish trend or vice versa. Change of Character (CHOCH): The first instance of a significant shift in market sentiment and trend direction is termed "Change of Character" (CHOCH). This emphasizes the unique nature of the initial change. Break of Structure (BOS): Subsequent occurrences of a similar shift in market sentiment are labeled as "Breaks of Structure" (BOS). These serve to differentiate the first significant change from those that follow. These concepts are vital in trading and technical analysis as they help traders identify changes in market sentiment, adapt to evolving trends, and make informed trading decisions. Recognizing a "break of structure" and understanding when it leads to a "shift in structure" is essential for effective trading.
Education
by BlackWatch01