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Hey everyone. Josh Martinez here, and welcome to This Week’s Idea. Today’s date is September the 27th, 2021. We are trying a new format so let me know in the question section box down below if you like this format, or if you want to go back to the monitor.
So in front of you is the risk disclaimer. This just means there’s risk involved. You should never invest money that you cannot afford to lose. Always keep risk management in mind. Understand that we are not CTAs, which stands for Commodity Trading Advisors. And what that means is what I’m going to share with you is research, and ultimately what you do with this information is completely up to you.
We are not IBs which stands for Introducing Brokers so we will never refer a broker to you. Picking a broker is a personal choice. We are not CTAs, Commodity Trading Advisors, so we cannot dictate your trades and we cannot provide customized investment advice. We are not money managers so we would never ask you to give us money [inaudible 00:01:10] your behalf.
What can we do? Well, we’re like a newspaper. We’re going to publish information. We’re going to share information. We’re going to share with you our research, but ultimately what you do with this information is up to you. So, with that being said, let’s go ahead and get started.
So what we’re going to do is we’re going to start with the NASDAQ 100. We’re going to start out with just a blank chart. Ultimately, when it comes to trading, I say this a lot because in my opinion it’s very true, but ultimately you’ve got to believe in something. You got to have a methodology. And what you believe in will dictate your actions and your actions will reflect your beliefs. And so when you turn on your computer and you see a blank chart like this, where do you begin? How do you structure a trade? Well, some people, they’ll look at economics, fundamentals, technical systems, indicators, et cetera. So my way is not the only way. It’s just the way that I like to do it. My belief in trading is that the markets U-turn at/on and/or around the same price points. And so when I look at a chart, what I’m really trying to decide is, are we going up or are we going down? Because really there are only two choices here. It can only go up. It can only go down. So you’ve got a 50% chance of being right, and a 50% chance of being wrong, if we just simply guess the overall direction.
So I believe the markets U-turn at/on and/or around the same price points. Why? Normally it would go to the most recent low or high, and I’ll work my way backwards. And the reason why I work my way backwards is because trendlines should do three things. Number one, they should give you the overall direction. Is the market going up, or the market going down? Number two, they give you the speed of the market. How fast, or how slow is the market going? We know the speed based upon the angle of the trend. And number three, they give us U-turns, which means these U-turns are trading opportunities.
So when we take a look at the NASDAQ 100 and we say, okay, well, the market is, for whatever reason, has been U-turning here. Formed a high there, formed a high there, formed a high there, formed a low there, formed a low here, formed a low here, formed a low there. So for whatever reason, the market’s been U-turning at/on and/or, around this price point.
So now, I said okay, what do we want to do with this information? Well, what we want to do is we want to say, okay, well, if the market’s going to go up, where’s it going to go up to? Well, just like how we have this angle that pushed the market up, we’re going to have an angle that more than likely will push the market down. What you’re going to notice is we have what’s called a channel. Now this channel is highlighting where the markets can U-turn. So we have for whatever reason, the market sells off the top level. Sell off, sell off, sell off.
So now we have structure. And in this structure we can really… We’ll delete this just so we can have a little more information. In this structure we can create a trade plan, and the trade plans can be relatively straightforward. When the market touches or comes near the bottom blue level, we’ll look to buy it toward the top blue level. When the market touches the top blue level we’ll take our profit and we’ll let it reload. I like to trade it in the direction of the trend. We can see the market is trending up. We are not trending down. So I’m a big believer in only trading with the trend. If you think about it, it’s like a one-way street. You’re driving, and everyone’s driving up, everyone’s driving towards north, everyone’s going this way. If you drive against traffic, normally into more accidents, right. And so in this scenario, I’m going to be expecting the market to push bullish towards the top of the channel. Now this top of the channel from where we are now, this is about 3,500-plus ticks. Almost 4,000 ticks, give or take. But we’re going to say 3,500 ticks, give or take.
Now, what is that worth? Well if I bring in a calculator, and if I were to trade one micro E-mini contract, every ticks worth about 50 cents. So I times it by 50 cents. It was a 1,700 US dollar buying opportunity. Pretty good. You know, considering it’s going to cost about a thousand dollars to invest into the market. No, a hundred dollars to invest to the market with [inaudible 00:05:25] trader eight during normal intraday hours. Or, you can invest a thousand dollars and trade a full E-mini contract during normal intraday hours. 3500 ticks, times it by $5 a tick so that’s what you get with a E-mini contract. This is a 17,500 US dollar buying opportunity. So, what we have here is we have an opportunity where we’re going to expect the market to increase by 3,500 ticks.
Now, what we want to do is we want to try our very best to buy the market when the market’s going up. One of the things that I like to do is whenever I see a daily timeframe pushing up, I will go to a one hour timeframe, and as long as we’re in the buy zone, then I will start to apply my buying methodologies. Why do I do this? I do this because I understand that we’re 3,500 ticks away and that’s where the market’s going to rally. It’s probably going to create a bullish trend. And what I’m looking for off of the one hour timeframe is just a bullish trend. Higher highs, higher lows, higher highs, higher lows, higher highs, higher lows, so on and so forth. And what I’m trying to do is I’m trying to decide, are we going up now? Well, I need to find, are we in a trend? Did we break the uptrend line? Are we in the sell zone? These are the things that can help with overall trading methodologies.
So right now, off of the one hour timeframe, we are in what’s called the sell zone. So it’s going to make trading a little bit riskier if you buy the market now, simply because the angle… Because my belief, right, because what you believe in will dictate your trades, or dictate your actions, your actions will reflect your beliefs. My belief is the markets U-turn at/on and/or around the same price point. So when I look at my one hour timeframe and I go, “Well, you know, we broke the angle that pushes the market up,” and the question is, do I want to buy the market now? And the sell zone, if I do that it’s against my belief, right? So why? Because I need to buy the market when the market’s going up.
So, is there any other angles that could push the market up? Is there something I may be missing? Do I have the wrong buy zone, sell zone? So not to make something up, but normally this is a nice trader’s tip, but traditionally markets will U-turn at/on and/or around the same price points, or around the same angles. And if you ever are wondering, hey, are we at an area that could U-turn the market, just put a horizontal line on the market and look left. It’s the simplest, easiest thing. Just zoom out a little bit, bring in some more candlesticks to look left. Now look at that price point. If we look left we’ll notice the market is hitting an area where it’s used to U-turning.
So, for whatever reason, not all the time, but for whatever reason, the market’s been U-turning at/on and/or around this blue line. Now this is previous highs. And there was a saying called, past resistance can be future support, or past highs becoming future lows. So this really helps support the evidence of saying, okay, well we may have broke the inner trendline, but we’re still in the buy zone because we’re above the known level of U-turn so we’re in the buy zone. Now, I don’t want to guess the buy trade. I don’t want to guess when the buyers taking [inaudible 00:08:55]. I want to buy when the buyer’s take [inaudible 00:08:57], so how do I do this? Well, I’m going to bring in what’s called a counter trendline. And essentially the market, it won’t go up unless we close above that counter trendline. Now what I’m looking for, is I’m looking to buy on the extension. Now, some people, what they will do is they’ll try to guess the U-turn. I’ve found very, very little success in guessing the U-turn. That just means buying the market now, hoping it will U-turn. What I’ve found success in is buying the U-turn. So not guessing the U-turn, but trading the U-turn. Waiting for accounts to close above the angle that pushes the market down, so I’m looking for a counter trendline to break bullish.
Now in this scenario, if you know your Fibonacci’s, I highly, highly, highly recommend that you apply them, because your Fibonacci sequence is doing great. You can see here’s your one, there’s your two, there’s your three, and then there’s your four. Bingo! Fibonacci’s basically, they let you know hidden levels of U-turns. So the fact that we hit this Fibonacci extension just means a sell-off’s going to take place. Bingo, there’s your sell off. And so everything’s matching the Fibonacci sequence. Everything looks really, really good here. You have your Fibonacci sequence that puts us a short term limit, okay? You have a one hour up Fibonacci. This is going to be 15687.25. How far away is this? This is going to be, from where we are now, 2,211 ticks away. 2,211 ticks away. Normally you’d put your stop below the Fibonacci sequence. So stop can go below the boundary. 14906.00. Pretty good stop. Entry will be a closed candlestick above the counter trendline. So we have entry, closed candlestick above the counter trendline, bullish. In the buy zone. So we want the market to break and close above the counter trendline above 15127.50. Why? Because that’s the known level of U-turn. You can see that’s why the U-turns market over here.
So if we can get that counter trendline to break, then essentially what we’re going to be expecting is this, a 2,211 tick rally, if we can get the entries. No guarantees. And then we’re going to expect a retracement. And we’re going to expect another extension towards the north, and then another retracement and another extension. And we’re going to expect this to happen for 3,500 ticks.
So this week’s idea. NASDAQ 100, daily time frame. If I have an up channel. Hit the bottom of the channel. Historically speaking, the market usually rallies. 3,500 ticks of opportunity on the way up. We go to the one hour timeframe and we look for the bullish trend. We are trying to form the bullish trend. We’ve got an [inaudible 00:11:53] notch. You would just need that counter trendline to break bullish. The next stop is going to be 15687.25, if we can get the entry according to the research. And as you know there’s quite a bit of opportunity. 2211 times by 50 cents a tick. That’s $1,105 for every micro you trade so it’s a pretty big opportunity.
All right, counter trendline breaks bullish, gets us in. You don’t have to use these stops, use these limits. It’s just, again, a methodology. You can use whatever you wish. It’s just our research here and time will tell if we’re right or wrong.
All right, everyone, Josh Martinez. Don’t forget to let me know in the question section box down below, or the comment section, if you like this new format. Have a great day.
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