Here are the charts of ES, NQ, RTY for March 11 2019 , the day we had a very strong trend up day.
This post reviews how the levels system pointed out support and resistance area on the move up, how each leg up is identified
Identifying Trend up
The first sign is PreMaret level High resistance getting broken and becoming support. Afterwards, watch RTH Open (OPG level) and see what happens when price hit each res level above , whether it is from Pre Marlet or RTH time frame. If the resistance level hits and gets broken, it opens the next level up indicating a trend up day as opposed to a two-sided trading day.
What does these levels give you on trend day?
- It identifies trendy day early on
- It tells you quickly that you are on the wrong side of market if you fade a level and price goes against you ( as opposed to guessing a wider area of resistance and risking more capital)
- This level lay out knowledge alone keeps you away from risky trading against the trend
- It gives you areas where you get to board the trend bus. That is typically where a level gets converted as support ( or resistance on a trend down day). It is much easier to trade with the trend
- Major res area /support areas will often give a reaction. So this gives you the right place to short a trend up or buy a trend down. Such levels have a high likelihood of getting a small pull back so a trader can book some profit and go break even stop. if not, it is very likely you get an escape hatch. An escape hatch is ability to scratch the trade at beak even price or small loss.
Let us review the three futures now
The chart annotates 8 distinct steps starting from launch of the trend at RTH (regular trading hours) open at 9.30 till market close. Notice major resistance area giving +2 pull backs
Note #2, #3 #4 #5 steps that gives entry into the trend
These are two areas I traded personally and posted in my community room
#3 set up 2768-2769 area support
#4 set up 2779 area support. I started with 1/3rd position long then added another 1/3rd more and stayed in till 85s which was next major area of res coming
RTY gave the best S/R conversion today and also acted as the leading instrument to watch for an ES trader. Once RTY converted a level as support, ES followed course. It also provided an added element of confirmation of trend up for ES trader