by yahoogle at tradingdanumbas.com
Have you ever found yourself following the advice of market analysts calling for an impending crash, only to see the market zoom up like there was no tomorrow? Or have you followed the crowd, getting bullish just as the market was about to take a plunge?
If so, your experience is common, as the Internet is littered with market analysis that just leads people astray. However, there is a better way to trade, and in this article we're going to show you recent examples of how unbiased analysis can correctly catch both highs and lows. This is how we keep our members at TdN on the right side of the market.
Buying the lows
A common trap that traders fall into is thinking of the market as moving in a single direction without anticipating turns and countertrends. This sets them up for having their trading stops hit or being squeezed out of the market, resulting in sometimes heavy losses. Market trends alternate with countertrends. A successful trader must be ready for changes in trend without feeling lost and confused. Since late April we correctly adopted a bearish posture as we saw the upside momentum waning. Evidence suggested the market was ready to turn south, which it did. This was the subject of prior articles we have posted at our site, www.tradingdanumbas.com. However, on May 25 we had a major confluence of cycles and witnessed a potential 5 waves down into a key level of support that our members were given access to. At this point, despite the earlier bearish stance, our unbiased analysis allowed us to warn our members of an impending (and significant) rally.
Part of the answer to recognizing turns and the beginning of a countertrend is to observe how price behaves at key levels. At each level, watch to see whether the market starts treating it as support or as resistance, and trade accordingly from that level. In this way, key levels can serve as "stepping stones" as the market goes down, and again as the market goes up. As can be seen by the collection of charts below, our members were able to follow each key level, whether support or resistance, to the next target. The 1041 June ES target level, which our members were given days in advance, was only breached briefly. Then, as the downside momentum was exhausted, a major rally immediately followed, right in line with our analysis. We were not only able to buy the 1041 ES level but also the higher low at 1049 June ES, based on our real-time intraday guidance.
The charts below cover what transpired over the next few days and our concurrent analysis.
After letting our charts do the talking, we're going to turn our attention to what happened on June 4 and the retest of the 1105 SPX resistance area.
Selling resistance in a downtrend
One important concept we often stress is to sell from resistance in a downtrend, thus achieving optimal risk/reward entries. Of course, it is essential that the trader is able to identify a trend change as early as possible. With our key levels, unbiased Elliott Wave counts, and proprietary trend indicators, our members are well equipped to recognize such market conditions.
The last market rally ran into big resistance on June 3. In the early hours of June 3, in the globex (overnight) session, the futures seemed to be attempting a "breakout" above the 1104-06 ES resistance band. Our members were given clear criteria to watch for in a breakout situation, and in this instance it was only a false break. Prior to the June 3 close, we pointed out a key level that had to hold or the market was likely to head lower. This level was 1097 June ES.
Later on in globex, 1097 was lost and was tested from below as the NFP data came out on Friday. The 1097 level was emphatically sold, and ES kept sinking lower as the session progressed. It was clear that many traders out there, lacking our market guidance and led on by rumors instead of sound analysis, were not prepared to deal with the false break above 1106, and the loss of 1097.
During the regular session we soon identified 1088 as the make-or-break level; if recovered, the decline was likely to be merely corrective, but if sold the downtrend could be kept alive. 1088 was a good risk/reward entry, as a further decline promised to go a lot lower. Our members had also been told well in advance that loss of 1080 would also expose ES to further weakness, on a larger degree. This level, too, became resistance which got sold, and the market plummeted for another 20+ points.
On the next day, even before the market opened, our members were already informed that 1069-70 was very important. If a 4th wave up, this area had to hold as resistance. It proved itself as resistance, providing our members with further optimal entries. Further downside progress was made, worth nearly 30 additional points over the next two sessions, before our 1041 support area came into play again and it was time to trade the upside again.
There are plenty more examples to give, but we'll save them for our next article. As you can readily see, our service is living proof that one can trade the market either up or down, for substantial gains in a higher volatility environment, with analysis that is timely, unbiased, and precise. This is something we have specialized in since our site was launched in 2008, and our members have recognized our site as being quite unique in this regard. We truly think that the time has come for more people to find out about what our service can deliver.
Is the rally truly over, and is the market ready for lower lows? Don't get caught on the wrong side of the market. For answers to these questions we urge you to join our thriving community of traders at www.tradingdanumbas.com.