[Watch today’s update by clicking on the picture to find out how to analyse trends using key bars. It will give you confidence in mapping out support and resistance zones above and below the market and will give you solid entry points and targets for your trades.]
As the S&P 500 heads up into the key resistance zones that I have been discussing for the past month, traders should be planning out their trades and getting excited about the opportunities to come. But one of the most important aspects of trading any market is to work out where the key support and resistance zones are above and below the market so you can work out what your entry, stop loss and initial targets should be.
In today’s update I outline the power of combining the concept of key bars with the understanding of how distributions form. If you don’t have a clue what I’m talking about you just need to set aside 10 minutes of your time to watch the video where it will be explained in plain English using live examples from the E-mini S&P 500 chart.
These concepts apply across different time scales and can be applied across all markets. It is a powerful concept that will unravel many of the mysteries of how trends develop and it will give you a concrete method for building trading strategies based on the actual price discovery process that the market goes through.
Without a clear model of market behaviour, you are flying blind and will most likely be tossed around by market volatility rather than taking advantage of it. Trading with discipline can only happen if you feel confident that you understand why price action evolves as it does. If your stop loss is at a point where you know you have been proven wrong you will be happy to take the loss at that point rather than vacillating over whether or not you should hold on to see if you can be made whole again.
If your targets are at a point where you know strong support or resistance is usually found you will be happy to take some profit there rather than holding on to the whole position due to greed.
If you have experienced the washing machine of emotional turbulence that occurs when trading and have ended up confused by your own self-destructive actions in the face of market volatility, you may want to watch this video to discover a new way of seeing price action.
Editor, Alpha Wave Trader
PS: Aussie stock picker, Sam Volkering (with gains as high as 1,431% in the last 18 months) reveals what he believes are his next four big potential winners. Download your free report here.