E-Mini Russell in an up-trend.
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Hey everyone, Josh Martinez here with tradersagency.com, and welcome to this week’s idea. Today’s date is May the 24th, 2021. And behind us is the E-Mini Russell 2000. This is a daily timeframe, and this is on the futures market. Now, with every tick trading a E-mini contract, every tick’s worth about $5. When trading a micro contract, every tick’s worth about 50 cents. We do have about 1,000 tick opportunity. So anyone who is trading E-mini contract, if the research holds true, this is about a $5,000 buying opportunity, and with a micro, it’s about a $500 buying opportunity. So, at the end of the day, how do we come up with opportunities like this? Well, it really comes down to some foundations and some core beliefs. You know how in life, how we make decisions on who we are. We say, “This is right, and this is wrong. And we do these things because it’s right. And we do these, and we don’t do these things because it’s wrong.” And this defines our character.
Well, ultimately, trading is the same way. What is your foundation? What do you believe in, and how are you going to act because of your beliefs? One of the belief systems that we have here is the market’s u-turn at, on, and or around the same price points. And so what we have here is we have this up channel. It’s a very, very slight and subtle up channel. Almost looks like left to right consolidation, but you can begin to see that when or if the market comes near the bottom blue level of the market goes up and when or if the market touches the top level at the market goes down. Now the bottom level is a little cleaner. You can see it’s almost a straight line where almost exactly to the tick, the market u-turns, but the top is a very, very messy.
You can see how sometimes we break above it. Sometimes we u-turn right on it. Sometimes we break above it. Sometimes we u-turn right on it. So what we want to do is we want to kind of do our very best to match up the top resistance to the most touches the same at the bottom. And it’s not an exact science. So your channels may be a little bit different than mine, but all in all, it just supposed to give us the general area of where the market’s like to U-turn.
Now, this has been around since February of 2021. So it’s been around for quite a while. Market hit the bottom blue level, and it looks as if it’s starting to work its way towards the top level. The distance between where we are now to the top level is about a thousand ticks, and that’s where the $5,000 with an E-mini contract comes about, or 500 with a micro contract.
So there’s a couple of things that we want to take in consideration here, and how do we trade this?
Well, one of the things that I like to do is I like to use this for direction and then go to a smaller timeframe and just wait for the market to enter into the buy zone before looking to buy it. Let me draw out the concept. So if you can imagine, imagine that this market was once making lower lows and lower highs on the way down. And we then draw a downtrend line, and now we say to ourselves, “Okay, the market hit an area, and we’re anticipating the market to u-turn on the way up, like so.
Well, when it breaks and when it breaks this down angle, essentially the angle that was pushing the market down has been broken, and that’s a sign of a potential reversal. And oftentimes, if you use a right angle, a new trend will begin, so if you can imagine that this is a one-hour timeframe. When the one-hour timer is on its way down, and once it breaks that line enters into the buy zone, it should start to head on the way up when you have a larger timeframe direction.
And you can kind of see here. See how the markets are falling sharply here. The market falls sharply there. Market fell sharply there, but once it u-turn and move from the bottom level to top-level, it u-turned up, it u-turned up. So if we go to a one-hour timeframe, we can begin to see that the downward movement is over with. The sharp downward movement’s over with, and the upward movement’s already starting. So we are officially in the buy zone. We can see that we are making higher highs and higher lows.
The key for me is as long as the market stays above this interrupt or trend line, continue to look to buy the market for about a thousand ticks. Now you can use your favorite entry strategies. You can use tunnel trader. You can use destination trader. You can use Fibonacci’s contra line breaks. Realistically, as long as the market’s in the buy zone, it should head up. Stops can be in the sell zone. And that’s this week’s idea. This is Joshua Martinez, and we’ll see you next week.
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