E-mini Future’s – How To Create “Structure” For Price Action
This short day trading video (6 minutes) shows how to use 4 moving averages to help you see direction and support/resistance on all markets. Yes, the title says “E-mini Futures” but this works equally well for the stock market and Forex. It also works for day trading, swing trading and investing.
Enjoy the video and.
You’ll find the text below the video if you want to follow along.
Today we are going to talk about a strategy trading the E-mini future’s and actually this strategy can also be used for all stocks for Forex or commodities. Itâ€™s about the structure in the chart.
Lots of people look at charts and they canâ€™t make heads or tails out of them, they canâ€™t see any order in them. And itâ€™s very important to have clarity, so thatâ€™s where I am going to help you today. By using certain moving averages.
Here are the moving averages I put up on my charts:
- This black one here that is a 15 Exponential Moving Average.
- Then the red one is a 50 period Simple Moving Average.
- The yellow one is a 100 Simple Moving Average.
- And then this purple one is a 200 period Simple Moving Average.
Those are the four that I put up on my charts. Now they serve 2 different purposes:
- Number 1 is support/resistance.
- Number 2, we look for how they align with each other and interact with price.
So for example, here as you can see, in this area, really all through here, the price is kind of stuck in the moving averages.
The first thing to notice is that all four moving averages are very close together. So basically what that literally means is, price hasnâ€™t really done much for the last 15 bars, 50 bars, 100 bars, 200 bars, and therefore we call that a consolidation time and it is very similarly dynamic to a Bollinger Band squeeze.
Bollinger Band squeezes are where they have a low volatility time. And that actually is a wonderful time to look for a trade. Because there are cycles in the market, many different types of cycles. I think when most people think of cycles, they probably think of just up/down cycles like that. Sorry my artistry is non-existent. And they would see these as cycle high, cycle low, cycle high, cycle low. And that is true, that is one type of cycle and a very important one.
But another type of cycle is expansion/contraction cycles. And those can be played very well for trading. Can make a lot of money doing that. What we look for is a contraction cycle. Lot of people do this wrong. They will scan markets. They are looking for high volatility markets, thinking, â€œOh I want to be in a high volatility market because that means marketâ€™s moving a lot and I could make a lot of money because itâ€™s covering a big range in a short period of time.â€
The problem with that strategy is that by the time that shows up on your scan, there has to be enough data for that to be actually calculated and show up on your scan. Quite often you are going to be coming to the end of a high volatility period. And then itâ€™s going to go in a low volatility period. Thatâ€™s the expansion/contraction cycle. So the better thing to do is to actually scan for low volatility patterns and again Bollinger Band squeezes are great.
But here is another thing you can look for and that is simple. Again, this works for E-mini future’s, stocks, Forex and other markets: These four moving averages all clustering together like that. And then we look for a break out. You can trade it different ways. You can use your favorite indicator, use whatever you enjoy doing. You can look for a break out of that high. And notice how the moving averages now start pulling apart. And of course then the market just takes off.
One last thing that I will show you on this particular E-Mini Future’s video. Letâ€™s move forward here, and when we get a trend reversal. Okay, hereâ€™s another way you can see structure. By the way this is called the stacked moving average pattern where we have the 200 at the bottom. 100 above it. 50 above it, and the 15 above that. And thatâ€™s generally consider a trending type of structure when that happens.
Now the other thing I really like is the 15 EMA. Some people useÂ the 20 MA and thatâ€™s fine. Again, the exact number you use isnâ€™t going to make a huge amount of difference but just from trading literally decades now, I decided I like this one.
And so what I look for is, thatâ€™s the first line of demarcation where things are expected to change. So that is what happens right here. Price goes below the 15 EMA and then notice what happens, it stays below that 15 EMA all the way down. So then it crosses the 15, the 100 and even the 200. But itâ€™s this 15 EMA, as I said before, they provide support/resistance as well. Thatâ€™s what I look for and that works out beautifully.
So putting these four moving averages on your chart can start to give you some structure, a visual structure to price and be very helpful. Oh, look at that we got a new release for a Ninja Trader. Thatâ€™s great. Well I am going to go download that now. But while I am doing that, I hope you liked this video. And if you did, please click the like button below and leave a comment telling me what youâ€™ll like me to cover in future videos. I am very responsive to that. Weâ€™re kind of forming a community here and I love that.
Also I am giving away one of my favorite trade strategies. Just fill out the yellow form at the top of the side bar on the right. Once you do that, Iâ€™ll personally send you an email with first video.
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