The next +1000 tick push on NASDAQ.
Behind us is the NASDAQ-100 with an E-mini contract. Every tick is valued at $5 and for every micro E-mini contract, every tick is valued at 50 cents. Now, we do have a +1000 tick opportunity if this market can U-turn. So, with a full E-mini contract, there’s nearly a 5,000 U.S. dollar potential return. And with a micro contract, it is nearly a 500 U.S. dollar return.
Find the U-Turns
So, normally what we try to do is we try our very, very best to find areas of U-turn. Now, we have this bottom blue level and this bottom blue level’s been U-turning the market for quite a bit and for some time. One of the things that you can do is, you can try to find these areas where historically speaking the markets U-turn. Now, we can see that the market started U-turning back in December of 2020. So, it was a pretty substantial number. You can see how we have… we bring it all together, we have U-turn, U-turn, U-turn, U-turn, breaks through, U-turn, breaks through, U-turn, U-turn. Now, there’s a couple of things I want to point out. When, or if the market breaks below the blue level, we usually have a very large sell-off.
So, if we do not get a U-turn at, on, or around this blue level, usually the follow-through is monstrous. So be very, very careful with trying to buy the market near this blue level, because if you get it wrong, it could be very dangerous. Now, how do you protect yourself? You can protect yourself with good risk management. What that means is if you risk too much money in a single trade, you can lose too much money in the single trade. So, you should only invest money that you can afford to lose, if you decide to invest at all. Now, when we take a look at the NASDAQ, we take a look at the most recent market movement. We’ve created these boundaries, and these boundaries are pretty straight forward.
You have a bottom area where lows are being found.
So you can see floor support, floor support, floor support, potential floor of support. Now, we zoom in and we look at the most recent here now, the question you got to ask yourself is, “Do you want to buy it now? And what’s the risk involved if you buy it now?” Well, if you buy it now, you’re buying it at the area where the market could U-turn bullish, and historically has U-turned bullish. So, percentages and probability is in your favor, but it just hasn’t U-turned bullish yet.
The sellers are technically in control. Historically speaking, if you buy the market when the sellers are in control, you normally lose the trade or experience drawdown first. Which means market goes against you before it has a chance to go for you. You can run into a lot of risk management issues. You can run into a lot of stop placement issues, because if you buy the market now, where do you place your stop? Below the low? Okay, well, what if the market falls a little bit more before the rally? You get stopped out, then the market goes your way. So, it’s never a good idea to buy when the sellers are still in control and that’s going to be a discipline. It’s going to be a discipline to wait for the proper entry. So, what is the entry? Well, one of the things that I like is what’s called a counter trendline break.
So, you have this blue line and this blue line just simply measures where the market’s been falling. So, you have that blue line, market falls, that blue line, market falls, that blue line market falls. There’s been several attempts where the mark has tried to close above. We even got above there this morning quite a bit, but by the time the counts at close, we closed below it. So that means that, hey, there’s some buying pressure here. Yes, absolutely appears that buyers are stepping in and bringing the market up.
I think that’s very present with it being 11:58 AM Eastern Time. This candlesticks about to close, but you can see that long way towards the south. So, it seems like the buyers are stepping in and not allowing the NASDAQ to drop, which is a good thing for the upside. For the confirmation of follow-through, we really want the market to close above this blue line, because that’s going to mean that the short-term downward angle has been broken and the longer term angle or longer-term extension can present itself. We’ve seen this happen several times, a few times with this angle when, or if, the mark comes near the bottom blue level, the market begins a U-turn. If we simply just wait for the counter-trend line to be broken, market typically goes up. Here’s an illustration of that. Well, cause a little bit easier to draw it out than it is to kind of see with the candlestick. So, imagine we have this up channel.
Higher highs, higher lows
You can see that the market is making higher highs, higher lows, higher highs, and higher lows. This is where we are. The threat of what the mark could do next is one of two things. It could fall like so, or it can rally like so. Frankly, we’re right here.
We just don’t know what the market may or may not do. Based upon the pattern, it could go up. If the market’s going to reverse, that happens here. This analogy and this situation is very similar to what you see when you drive your car and you’re at a stoplight. When you’re at a stoplight, and you have… I’ll try to draw it out, but you have the signal, and you have three circles. You have the green light. You have the yellow light. Then, you have the red light. Basically, what ends up taking place is when you’re right here, when you’re approaching, it’s like you’re at a yellow light, and then it turns red.
Basically, what ends up taking place is when you’re right here, when you’re approaching, it’s like you’re at a yellow light, and then it turns red.
So, if you buy the market now, you’re basically running the red light.
The problem with that is you normally will lose the trade. Why? Well, think about it. If you run a red light in the real world and you cross the intersection when the lights red, you expose yourself to risk. What’s the risk? You can get pulled over by the police or worse. You can get into an accident cause cross traffic can hit you or you can hit them. Therefore, it’s financial consequence. If you can wait for the light to turn green, which really is just discipline. It just means that your patient.
What you can do is you can bring in an angle that measures the downward retracement, and if or when the market closes above that angle, like so, all that really means is that the light has turned red to green. Meaning that the short-term downward movement is over and the extension is taking place and you can make money there. Normally, you place your stop below the U-turn, where you bought. So, you want to place your stop somewhere around this area. Okay? Then you want to place your limit, which is your profit opportunity, just below the blue level.
Trade at the Green Light
So, we bring this to the real world. Here we are. Okay. Right now, the light is red. You have a decision to make. Are you going to be patient and allow the light to turn green so you can buy it? The green light is when the market closes above that blue line, and then you can buy it just below the top of resistance about +1000 ticks, give or take, stopped as below your U-turn. All right, that’s this week’s idea. NASDAQ-100. If we can get an entry and if support hold it’s +1000 tick opportunity. With the full contract, E-mini contract, every ticks worth about $5. That could be worth 5,000 US dollars. Every micro, which is 50 cents a tick, this could be worth 500 US dollars. So, absolutely worth our time. The question is, are you going to wait for the entry?
If you buy it now and the market sells off, well, you kind of ask for it. If you buy it above the counter trend line break, and it still sells off, well, you did everything right, but you lost. Sometimes that happens. So, this is Josh Martinez, and we’ll see you next week. Hey guys, if you enjoy this video and you want to stay up to date to my weekly content, go ahead and subscribe to this channel tradersagency.com. If you want to be notified every time I post a video, go ahead and click on that bell down below. If you want even more information, don’t forget to visit my website at tradersagency.com. Subscribe to my free weekly newsletter, where I send out my research on market opportunities. Thank you for the opportunity. Have a wonderful day.
