Trading ES Price Pattern Action Cycles, Part 4: This video (and article) on trading ES price pattern will teach you not only valuable insights to improve on futures trading, but also on stocks, futures, and more. This discussion about Trading ES Price Pattern Action Cycles will also help you in analyzing price actions, a very practical thing that is important for you to understand.
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Trading ES Price Pattern Action Cycles, Part 4
Welcome to this fourth in this series of Trading ES Price Pattern. Today, I’m going to use an example, Trading ES Price Pattern futures cycles, but this applies equally well to the forex market, day trading, swing trading, the stock market, futures, whatever you’re trading because it really has to do with the way that markets move through time. Now, in the past, we talked about other types of cycles such as seasonal cycles or calendar cycles, expansion and volatility cycles, and then we also talked about the chaos and the orderly cycle. Today, we’re going to look at price action, Trading ES Price Pattern, a very practical thing that is important for you to understand. So let’s take a look at what we’re talking about here. When it comes to cycles and price action, this is very important to understand. Now, we have a trend.
And so we’re looking at this upcycle or this uptrend here. Now, in an uptrend, we want markets to move up in price and in time. What that means is that we are using both time and price; in fact, W.D. Gann was famous for teaching this, the confluence of time and price. So when you’re in an upcycle, it’s not just about higher highs and higher lows. That has to do with price and so that’s fine. That’s half of the equation, but what people rarely talk about is the element of time in a higher high and higher low. So that’s what we’re going to talk about right now.
Price pattern trading
Here’s your half cycle from a low to a high, and then from a high to a low, that’s another half cycle, so your full cycle will be from the low to the low. Then it moves up from there and we started a new cycle. So that’s what I’m talking about these up/down cycles, markets moving up and down. Now, when we’re in an uptrend, we want to see two things. In other words, the practical application of this is to determine whether the market is going to continue or we all know the trend is your friend until the end. So if that trends not going to continue, you want a way to identify that. So, in an uptrend, the range of the price going up should be greater than the range of the price coming down in the down cycle.
And that just has to do with the price; when it comes down, it’s covering that much range, when it went up, it covered that much range in price. So, pretty intuitive, and this is what most people understand. So I want to talk about that too much, but now what I want to talk about is time. We also want to add the time element. In this half cycle, we want from the low to the high. There’s our time. We want that time to be greater from the time of the market goes from the high to the low, again, in an up cycle. So, again, that period of time, as it goes up, should be a longer period of time than when it comes down.
Price pattern in technical analysis
So it’s not just that it covers more price range. That’s half of it. Yes, that is half of it, but if you want the truth, the whole truth and nothing but the truth, you also have to look at how much time it spends coming down relative to how much time it spent going up. Now, this is called rate translations. If you want to get really into some specifics and technical analysis here, and I find unfortunately that this is not taught very often anymore, which is sad because it’s actually really helpful. So what rate translation means is if we look at this whole cycle, okay? Again, really it’s there that we put on our low or do we put it in there? Actually, the low comes in right about there and the highest up there.
So, there’s our full cycle. Now, if we were to look at this, the halfway point between the low and the low. So, in other words, from this low to that low, where is the halfway part? Is it at this blue line? No, that is to the right of the midpoint. So, again, I’m not going to measure this exactly, but you’ll get the idea. Let’s say I’m just going to eyeball it here that this is the middle note, which if we were to take this square and cut it in half, that is your midpoint right there. Now, if the high comes into the right of that midpoint, then it’s called rate translation. Essentially, that’s another way of measuring what I was just talking about, that the market has spent more time going up than it has been going down.
Most successful chart patterns
But there’s an official term for it. Now, if the market made its high over to the left of the midpoint, let’s say it went there and then it spent all this time coming down, that’s called left translation. It came into the left of the midpoint between the low and the low and then that would be called left translation. That’s not as strong of a signal for it to continue going up because, again, talking about practical trading and addressed theory here, that’s what we’re dealing with. We’re dealing with the issue of I’m going to take a trade, I’m looking to go along. But I got to trade it the hards right edge of the screen. So, do I have a high probability of this thing continuing to go in an uptrend after I get in? This is one way that can help determine that.
So the dynamic behind it, by the way, it’s not just charting or geometry or theory, there is actual practicality behind this, and what it means is that you’re getting a very strong impulse move when this happens. So it goes up very fast in a short period of time. And the way that affects the market participants psychologically is they feel like ‘I’ve missed out on this move’ and we had a big impulse move, and I got left behind. So that’s part of the mass psychology that’s going on that discourages people from coming in and buying after that event. Another very practical aspect of this is those big moves that have been in a very short period of time are often caused by news events, sometimes that’s now fake news. But, the point is that the market is reacting emotionally and a very quick a knee-jerk reaction.
Price action chart patterns
It may then end up very well, say ‘that deal is done’. That news is over with the money was made on that news or later on, it could be just minutes later they say that wasn’t really news, that was just a piece of gossip or rumor or because the markets respond to news so quickly they might then you evaluate it. They usually just read the headline and they’ll say that’s exciting. And then after the news comes out and they’ve taken their trade, their initial trade at least. then they read all the qualifiers of that news and they’re like well the headline sounded good. But now that I read all the details, I guess it’s not as good as I thought after all.
So these are the kinds of dynamics that happen. This is the reality behind the price pattern. And then when people think these things, of course, they’re less likely to follow through. So that’s what the price pattern means in practical terms. There’s a tool – now you can do this with just eyeballing it and getting to understand price patterns and kind of get these ingrained in your brain cells through repetition and that’s totally cool. I actually prefer to use tools that are objective mathematically so that I don’t have to depend on my discretionary evaluation. Now, we have a tool that’s mathematically based, then you have an objective evaluation. But, you also have a mathematical one that you can create rules with so that you will then you can build a rule-based system which I think is very important.
Price action trading strategies
So I’ve got a cycle indicator that I use. It actually catches every single cycle, high end low with amazing precision. It’s very accurate in identifying the final high and low so you don’t get stopped out so often after entry. And this is not an indicator that I sell. In fact, it’s not even a proprietary indicator, quite frankly. It’s an indicator that is already on your charting platforms, in fact, it’s one of the most common indicators that is on charting platforms. But it wasn’t designed as a cycle indicator and to time the market. So, I modify it. They just go into the parameters with the inputs, we modify it and we turned it into a cycle indicator.
So if you’re interested in that, it takes about an hour for me to help you get it set up in your chart and then to give you a tutorial on how to trade it because frankly, it’s very counter-intuitive how to trade it and a lot of people would look at it and say this doesn’t work until I show you the patterns you trade, the triggers and so forth. And then, in fact, I just had a gentleman wrote me the other day. He was already a professional trader. He said ‘thank you so much for this, it’s already improved my trading even though I was making money’. This is absolutely free, no charge whatsoever. Just join me on the Webinar depending on when you watch this video.
Rubber Band Trade Strategy
The Free Webinar may or may not still be available since things last here on youtube for years. But, just send me an email, barry@topdogtrading.com if you’re interested and we’ll send you an invitation to this. I love doing these videos for you. Please go ahead and leave a comment below on this Trading ES Price Pattern video. Give us a thumbs up, share the video below if you would. Really appreciate that. And it’s good to share good things, right? Share good things with good people. And I’d love to help you in any way that I can. Another thing that I have for free right now is I’m giving away one of my trading courses. This is an actual course with videos and there are five videos in it, it’s just a mini-course.
But in it, I share with you some very practical thing that you can actually incorporate into your trading. This includes my rubber band trade. And this rubber band trade is a complete trade setup that I’ll teach you in. My intent is hopefully you can start making money without having to spend any money. And I love to get you making money first before you make any kind of investment. And I’m obviously doing it on paper or simulator trading before, but I give you all the rules absolutely free. Just click that little icon in the top right-hand corner of the video. If you’re not watching a youtube, then there’s a link below or an opt-in form on the side. Once you do that, I’ll send you a link to the course with my rubber band trade strategy.
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BTW, if you’re interested in the indicator that I use personally for very precise entries and exits, I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.
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