Today’s date is July the 27th, 2019, and behind me is the NASDAQ 100 E-mini futures. Now, remember this symbol is going to be NQ, and if you want to trade the micro, it’s going to MQ… It’s going to be MNQ. That’s right. Micro, MNQ; E-mini is going to be NQ. Okay.
So here’s the monthly timeframe. We like to look at the monthly timeframe for direction. Ultimately, we’re trying to determine one of three things: up, down, or U-turning. Okay? So what do we do? Well, one of the things which we’ve learned in trading and breaking down the markets, the markets tend to do the same things over and over and over again. So when you look at the monthly time from, the overall purpose is to identify direction. Okay? We want to know if it’s going up, down, or U-turning.
Work Your Way Backwards
One of the things that you can do is you can look at where the market formed previous lows, and then work your way backward with just a simple trend line. So you notice that when the market has touched this bottom blue level, this bottom blue angle, the market has history of basically U-turning. You can see here, we get a nice little low price. The market U-turns up. We have a low price here. We have a low price there, and we also have a low price there.
So ultimately the overall thought processes is, look to buy low at, on, or around the bottom blue level. Well, if the bottom level did it, formed U-turns of the way up, then the question is, are we at an area now where the market, usually U-turns as well? So let’s go ahead and check that. Let’s go ahead and work our way back. And what we ended up discovering is, yes, we are an area where the market historically likes to form high prices. So you can see the market, U-turned there. The market U-turned here. The market U-turned here, and currently here we are right now hitting or at or around the blue line, which could U-turn the market back down.
The Waiting Game
So ultimately, the way that we have to play this is we have to do what’s called a waiting game, and one of the things which I don’t like to do is, I don’t like to try to predict the U-turn. What I like to do is to trade the U-turn. What does that mean? Well, if we’re at an area where the market has touched the top blue level, if I wait till the end of the month, which is basically the rest of this week… Friday’s the last week of the month, the 31st. Next Monday, I should have a decision on if structure’s going to hold or if we’re going to break out.
Now, if structure holds, more than likely, the candlestick’s going to close below resistance, and the market’s going to fall about 10,000 ticks. If the market closes above resistance, we’re going to have a structure breakout, and they rally 6,000 to 10,000 ticks. Now, ultimately, I am not really interested in trying to predict the overall future here. So what I want to do is I want to go to a daily timeframe, and in my daily timeframe, I’m just going to draw a buy zone/sell zone.
U-turn
So what that means I’m going to come up here, go to the daily timeframe and simply put, I’m just going to draw an uptrend line. If this market can close in the sell zone below the top blue level… And I’ll make it purple or pink. If we close below this pink line, which is a U-turn U-turn, U-turn, U-turn, U-turn, enter into the sell zone, then I’ll expect the market to fall 10,000 ticks to the bottom blue level.
Now, once again, you can see the range. Okay? We’ll bring everything back in. This has since been around for quite a while. I believe the total is going to be from 2016 area. So every time the market come near the top level blue level, before it U-turned, notice how it broke a counter trend line off the daily timeframe. So we broke the uptrend line, and it fell all the way down to support.
Then even here at the coronavirus drop, the market broke the uptrend line, and it fell all the way back down to the bottom blue level. If this market is indeed going to fall 10,000 ticks, it cannot physically fall without closing below this pink line. So ultimately, I’m not going to make a move on this one until next Monday, but the good thing is we were going to do this week’s idea next Monday, too. So we’ll probably do a follow-up on this one, but ultimately, again, what I’ve learned is you can only buy, you can only sell. You only got two choices.
If I were to close my eyes and flip a coin, we’ve got a 50/50 percent chance of being right or wrong. Simply put, if we sell in the sell zone or we buy in the buy zone, we traditionally begin to when more than half our trades. If we can win more than half our trades, as long as we’re physically winning more money than what we’re losing, then ultimately we’re going to make money over time, and as my opinion, everything you can never ask for.
So once again, NASDAQ, we have a potential 10,000 tick move. I won’t know. That research won’t be available until next week, but I wanted to bring it to your attention. Be ready for it. Something definitely to monitor. Again, if it breaks this trend line on the daily timeframe, I’m expecting a 10,000 tick downward movement. If we close above the resistance level, I’m expecting about a six or 10,000 tick rally. Hey, everyone. It’s Josh Martinez and I’ll see you next week.
