FIND THE STORY IN THE CHART 1/28/14

The saying "can't see the Forrest through the trees" has application to reading charts.  Too often a trader has a focus on the candle(s) and not the bigger picture or how the candles are piecing together in a story.  If the trend is your friend, then finding the story in price action is arguably the next best thing to the trend.

Finding the story in simple terms is finding a reason to trade:  price at X support or resistance, crossing Y,  testing a high or a low, on a trend line, etc.  The story has a greater importance if it can be repeated in another chart.

The charts used today (and the first I will review) were the ES 5 minute, the 1024 tick, and the 2 point bar chart.

THE STORY:  BULL TREND in a market that had broke lower in strong selling


5 Minute Chart

When buyers or sellers are noted, it will be assumed that they will require a +8 to +10 return.  We see that in the US Open and into the early AM trading as the +8/+10 became a resistance level.  A bull channel was noted as well, setting the dominant trade bias.


The 1024 Tick Chart

A similar bullish trend line and trading inside a range determined prior to the market.  All part of the story and reasons to trade your bias or dominant trade.



The 2-Point Bar Chart:

Trading in a bullish wedge (could be an ascending triangle using a flatter top) with higher lows developing.  Buyers at the lower trend line and sellers at the top anticipating an initial failed break out, with a significant break closer to the end of the wedge as price trades in a narrowing range.  Think of this area as a pressure cooker ready to explode.

Trades are personal and generally not posted.  Look at the WHERE not the amounts.  Look at the forest, and the story.