| Posted in PREPARING FOR THE MARKET DAY | Posted on
Price bars demonstrate orderly expansion-contraction polarity as the swing-momentum cycle
evolves. Bars tend to expand rapidly into a climax through rallies and selloffs. Then congestion sets
in and volatility drops as bar range contracts along with price rate of change. This negative
feedback characterizes progress until tight congestion signals an impending price movement that
again releases into expanding bars. Pattern readers have a trading advantage here because these
entry points capture the eye’s attention. Conversely, many math indicators hit neutral zones in this
environment and show nothing of interest.
Swing traders must pay special attention to these overlooked neutral conditions. Quiet balance
points trigger the most powerful and profitable opportunities throughout the markets. Empty zones
have little sponsorship or interest. They draw their initial power in a state of low volatility and
resolve it through directional movement and high volatility. They signal high-reward, low-risk entry
levels that allow swing traders to step in front of the crowd. Because narrow range bars char
acterize this opportunity, adverse movement after entry permits a fast stop loss exit with little
slippage.
Expansion-contraction ties closely into reward planning. Odds increase greatly that the next few
bars will contract when expansion bars thrust into known S/R. For this reason, the appearance of
wide range bars often signals the need for caution. Look at the chart landscape again, identify all
obstacles, and reexamine the intended holding period. The odds favor a pullback that will draw
down profit substantially before ejecting into another move.
For most trades, plan to exit when price expands into S/R. This strategy tracks the old wisdom that
advises us to ‘‘enter in mild times but exit in wild times.” Also consider closing the position when
the market prints a wide range bar that departs substantially from the routine price action but does
not occur at a breakout point. These often mark short covering moves, stop runs within smaller time
frames, and countertrend climaxes.
The swing trader seeks profit from single, direct price thrusts except when highly favorable
conditions demand greater flexibility. When momentum cycles align through several time frames,
and positions already show a profit, try to capture a series of expansion bars. But recall that markets
trend only fifteen to twenty percent of the time. Odds favor accepting the gift of a few bars and
moving on to the next trade. Only seasoned trading skill can consistently select the right path to take
with any particular setup. Learn to watch opportunity in three dimensions and take a giant step
toward this wisdom.
evolves. Bars tend to expand rapidly into a climax through rallies and selloffs. Then congestion sets
in and volatility drops as bar range contracts along with price rate of change. This negative
feedback characterizes progress until tight congestion signals an impending price movement that
again releases into expanding bars. Pattern readers have a trading advantage here because these
entry points capture the eye’s attention. Conversely, many math indicators hit neutral zones in this
environment and show nothing of interest.
Swing traders must pay special attention to these overlooked neutral conditions. Quiet balance
points trigger the most powerful and profitable opportunities throughout the markets. Empty zones
have little sponsorship or interest. They draw their initial power in a state of low volatility and
resolve it through directional movement and high volatility. They signal high-reward, low-risk entry
levels that allow swing traders to step in front of the crowd. Because narrow range bars char
acterize this opportunity, adverse movement after entry permits a fast stop loss exit with little
slippage.
Expansion-contraction ties closely into reward planning. Odds increase greatly that the next few
bars will contract when expansion bars thrust into known S/R. For this reason, the appearance of
wide range bars often signals the need for caution. Look at the chart landscape again, identify all
obstacles, and reexamine the intended holding period. The odds favor a pullback that will draw
down profit substantially before ejecting into another move.
For most trades, plan to exit when price expands into S/R. This strategy tracks the old wisdom that
advises us to ‘‘enter in mild times but exit in wild times.” Also consider closing the position when
the market prints a wide range bar that departs substantially from the routine price action but does
not occur at a breakout point. These often mark short covering moves, stop runs within smaller time
frames, and countertrend climaxes.
The swing trader seeks profit from single, direct price thrusts except when highly favorable
conditions demand greater flexibility. When momentum cycles align through several time frames,
and positions already show a profit, try to capture a series of expansion bars. But recall that markets
trend only fifteen to twenty percent of the time. Odds favor accepting the gift of a few bars and
moving on to the next trade. Only seasoned trading skill can consistently select the right path to take
with any particular setup. Learn to watch opportunity in three dimensions and take a giant step
toward this wisdom.
