Today, I am going to explain how to recognize market trading patterns.
Being able to spot specific market patterns is crucial to knowing when to buy and/or sell a particular market.
But how do we go about figuring out what the market is doing?
Well, we rely on our time frame charts to give us the fundamental data we need to determine the patterns that the futures markets are following.
Then, we can apply our tools, such as trendlines and Fibonaccis, to zero in on opportunities to make money in those markets!
So, let’s take a look at the Nasdaq 100 (NQ) and how I determine market patterns so you can see it for yourself…
The Long-Term Direction
So, how do we find the direction of a market?
We simply apply a trendline and follow the lowest price to wherever it leads us.
Once we have the trendline established, we can then see the overall direction of the market.
We use the monthly time frame to determine the long-term direction.
You can see an example of this in the monthly chart of Nasdaq 100 (NQ) futures above.
While there is a long-term up trend line, there is also a short-term down trend line that has kept the market down this year.
Finding High/Low Prices
When we determine the direction of a market, we’re trying to figure out which way the market will go over the next one to three months.
But that doesn’t mean short-term analysis is any less important.
In fact, the short term is where most of the action is, so let’s turn to the daily time frame now.
The daily time frame gives us our high or low price, as you can see in the chart above.
It also shows us where our daily Fibonacci levels are so we can more easily identify support or resistance areas.
Execute the Trade
Last but not least, the hourly is what we use to figure out when to execute our buy-in strategy.
We typically look for counter trend line breaks on the hourly time frame, which help confirm the market is moving in the direction we want it to.
These time frames will become the most familiar to you as you trade more often.
Without these charts, we wouldn’t be able to figure out when we should buy or sell!
The long-term view helps us find markets that are ready to trade, but the short-term view is what reveals when and how we should trade those markets.
The Bottom Line
Figuring out the trading patterns of a futures market is one of the most important things we can do as traders.
It allows us to find markets that are ready to trade, making sure we increase our chances of making money.
And by looking at both the long-term and short-term directions of a market, we get a clear picture of how we should implement our trading strategy.
With this information, you’re ready to start plotting a course to trading success…
But don’t do it alone. I’m here to offer my knowledge and experience you help you get there!
Before I Go…
With inflation on a fast-track, you need to know how to amplify your gains.
To see how I do just that by trading markets like Nasdaq 100 (NQ) futures, check out the link in the P.S. below…
For more on the markets as well as trading education and trading ideas like this one, look for the next edition of Josh’s Daily Direction in your email inbox each and every trading day.
I’ll be bringing you more of my stock and futures contract trading tutorials as well as some additional trading ideas.
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Keep on trading,
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