Trading the Trend – Part 2
Looking at the ES one session prior, Tuesday June 18th was a trend-day up that started out basing on top of its open range before moving up to magnetize at the 233(250)% zone where it never got much farther away into the session close. Again, disciplined traders stay on the long side at/above open range zone while riding that bias towards the pre-known price objectives that usually come to pass.
We refer to the 233 zone as the “warning track” because that is where false trend moves tend to stall. Just like an almost home run hit in baseball… it falls short of the fence. Many times during pure sideways range days, price action will hit one or both 233 zones on either side of the open range and mark the extreme points for that session.
The 382 level is referred to as CM-RM1 and 500 level is CM-RM2. Those are the most common price magnets traded to each day, other than the 233 which of course is hit = fulfilled the most because it is nearest the open range. I’ve done statistical studies for various markets-symbols myself and trader clients have done excel sheets for each calendar month going back years. Without quoting specific stats because they tend to vary between low volatility period and high, the 233 level is seldom untouched intraday while the 382 is hit more often than not. That leaves the 500 level which is reached by all markets and all symbols roughly 50% of the time, over the course of time.
This chart of the Nasdaq 100 emini futures (NQ) from Wednesday June 19th shows one other CM RoadMap value that comes into play only during extended trend moves. That would be the 780 zone or CM-RM3 marker. Notice how this NQ session fulfilled that price objective to the exact low tick. Common occurrence… happens all the time in any market and symbol.
There are specific uses for the values which include profit objectives and pivotal support / resistance zones to determine trades around intraday. We’ll detail all of that in follow-up conversations to come. For now I’d just like to introduce the concept and establish facts on how and what in this segment here.
Three things I want to reiterate now before we take it any further…
#1: This price-action based measurement study works for all markets/symbols that have a pit-session for trading. It can also work for other markets such as spot forex with experimentation of start times for the open range measurement. But it definitely performs equally well with single stocks, stock indexes, commodity and currency markets of all kind. If you can trade it, you can measure it accordingly. Price is price across all financial markets.
#2: It is possible that some or all parts of this trend-filter study can be used for systematic trading. I’ll be the first to admit there may be far more applications and uses than I have found or care to develop. For me this is merely a method-neutral approach to break down key S/R price zones on a chart derived from price-action itself.
#3: Last and foremost… these CM RoadMap price magnets that attract price action to them at all hours of the day are known and visible to you ahead of time, five minutes past the pit session open, every day.
This is definitely not some type of gray-area or curve fitted voodoo math. It is objective, black & white, identical to the exact second on a clock and specific tick on a chart for everyone alike. It’s simple, it’s powerful, it works to provide you with a defined edge. When it comes to trading and financial markets, price action itself is the best price predictor of all.