The next 1,000 tick move on the Russell 2000.
Hey everyone. I hope you enjoy this content. Don’t forget to click that subscribe button and hit that bell to be notified of upcoming videos. Hey everyone, Josh Martinez here with tradersageny.com and welcome to this week’s idea. Behind us is the E-mini Russell 2000, and we know with an E-mini contract, every tick’s worth about $5, and with a micro contract, every tick is worth about 50 cents. We have a 1,000 tick trading opportunity on our hands if the research holds true. With an E-mini contract, that’s 5,000 US dollars, with a micro contract of 500 US dollars, so it is absolutely worth our time and quite a bit of opportunity here. Okay, so what do we have? So first things first, we got to start with structure. This is the daily timeframe. We like looking at the daily timeframe because when we have a low price on the daily timeframe, traditionally, the market can extend or if it does extend, it forms a U-turn.
We get about a one to two week push or bullish follow through during the extension. And when we get a high price, same thing on the opposite. So we can see this bottom blue level’s pushing the market up. U-turn, U-turn, U-turn, U-turn, U-turn, U-turn, U-turn, U-turn. Top blue level is pushing the market down, U-turn, U-turn, U-turn, U-turn. So this market is moving from the bottom blue level to the top blue level. Your job and my job, if we choose to accept it is to find the low price to buy to the area where the market U-turns, which are about 1,000 plus ticks away. So there’s a couple ways we can do this, right? You can take the position trading approach and just have a massive risk in ticks and place your stop in the sales zone. And this way, your risk is then usually larger than your reward, but you normally win more trades. Or we can go to a smaller timeframe, which I like to do.
And on a smaller timeframe, try to find the reversal. So when we look at the smaller timeframe, again, we need structure. You got to have structure inside of your analysis. Otherwise, what the heck are we doing, right? So we got to have this pattern. We’re inside of this up channel that for whatever reason, when or if the market comes near the bottom of this blue level, the market goes up. Not always, you can have false spike, false spike there, but most of the time, market goes up, market goes up, market goes up. So right now we’re at the bottom blue level. We’re having a bullish reaction, which is great. Now we just need a bullish trend. Now this is where the discipline comes in and the understanding of the marketplace, because you can turn around and say, well, I’m just going to buy it now because it should go up.
And that is a huge mistake because it’s like being on a stop light and the traffic light is red. And you’re like, well, I’m going to run the red light because eventually it’ll turn green. It’s like, well, why don’t you just wait for it to turn green, cross the intersection as fast and safely as possible, because that’s what we’re supposed to do if we want to cross the intersection as fast and safe as possible, according to the rules. Any who, so we have this little down trend line which monitors the short term movement. So we have a high, a high, a high, and we need the market to break above that blue line. We call that counter trend line, because we believe the market’s going up. This counters the overall upward movement. So if we can get a bullish trend to initiate, we can have a 1,000 tick buying opportunity.
So how do we trade it? That depends on how you like to trade. You could take a buy and hold technique. You can do counter trend line breaks. You can use up Fibonaccis. You can use tunnel trade along, use destination trade along, basically [inaudible 00:03:29], whatever you desire, that’s your choice, but it would be a good idea to wait for the market to break the angle that’s pushing the market down before looking to buy. That’s this week’s idea. My name is Josh Martinez. We’ll see you next week.
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