It’s easy to get overwhelmed when looking at all the crosscurrents in markets along with all the technical analysis that is out there. Trading does not have to be complicated, it’s a matter of using our tools to see if the buyers or sellers are in control and where that changes. We have several simple ways to map and read markets. In this post, we are going to focus on the simple swap area of a swing and use that as a framework to read and trade markets. The swap area of a swing turning up or down is a significant market structure where the balance of power changes. Learn to see it and then make observations as to how price interacts with that area. Then design ways to read and trade it.
This month we’re going to follow the E-mini S&P and Aussie 240 minute swings. Last month saw a big jump in volatility as we followed silver and the Swiss currency. We learned a lot from these charts as bigger swings carved themselves out and the USD/CHF did a transition from down to up. It’s good to see these transitions take place live as you follow and learn to change with change.
What if there were no books or any instruction anywhere on how to trade and you figure it out by just observing and discovering? You would begin to trade based on your fresh observations, trying this and trying that, until you found your way, getting more efficient at it as you went, like a child learning to walk. If you did this, you would be learning from the price itself as it flowed, from a place of discovery and not-knowing. In our live Language of Markets session, we did an exercise where we took an active Emini-S&P market and learned as we went. I did this video later that afternoon to demonstrate how that exercise led me to my own beginner’s mind.
In these blogs, we have done a lot of work on mapping markets with swings. In this post, we will look at how minor swings grow up to be major swings and ways we can read and trade this dynamic. These will fall under the category of type 2 trades, expand then continue. Its a type of waiting outside the immediate price action that can be very relaxing. You can read about “The 3 Types of Trades” options on the Language of Markets home page.
To find the true structured support and resistance levels in a market, we use a contraction of price and a wash of that contraction. You can see these true levels on this 20 minute E-Mini S&P chart I posted for our members. In the video, I describe the steps to the process of a wash and rinse structure as a pivot component of a swing and how that can help us to read the true supply/demand levels.
This is a live clip from the Aug 3rd Language of Markets Live session where we discuss how approaching any method, structure, or trade with predetermined expectations blinds us. It’s a valuable thing to eventually have our expectations disappoint us. We are forced to give up and this frees us to see the whole picture. I then demonstrate how to discover the essence of swings by discovering controlling buyers and sellers in the live AUD/USD. I also give an example of how reading price action (bar-by-bar) easily shows us the controlling buyers and sellers that showed the swing to project for an entry.