Trading the Trend – Part 2

Trading the Trend – Part 2

In our first installment of this series, we established the simple fact that price action in ALL financial markets behaves quite predictably around its open range of the actual pit session hours. Not every day… but more days than not. Anytime you can find any price behavior that repeats itself more often than not, you have just found yourself some part of a decided edge to predictable trend behavior.

It’s one thing to know whether price action is currently more bullish or more bearish on a statistical basis. But that’s not nearly enough information to exploit. We also need to know where price action is headed, and also where the distant turning points may be as well.

Price Action Chart Passamore

The next step in our trend-filter process for intraday trading takes the initial open range zone, and adds some values to it. The actual levels I use to project/retrace high-odds price magnets to the chart are depicted in this fibonacci retracement bracket above. After literally years of testing, research and live observation, it was apparent that the 233, 382 and 500 zones had uncanny price attraction more often than not. I will be first to say that exact numerical levels are not resolute. I’m quite confident that the values of 250, 333 and 500 or 512 would all have similar blended results over time.

My open-range grid is drawn in the same direction as 5min price bar trends. A higher close from open means 100% is anchored at the low and 0% is anchored at the high of said (green) price bar. A lower close than open (red bar) means 100% is anchor at high with 0% anchored at low. On occasion where the opening bar is neutral (doji) in nature, I draw a double grid going both ways and mark the overlapped value zones where they blend.