Long, Intermediate, & Short Term Time Frame Market Development Analysis
To Shadow Traders,
A major part of your Market & Trading Narrative consists of Market Development Analysis for Long, Intermediate, and Short Term Time Frames. James uses a top down approach using Monthly, Weekly, and Daily charts to speed read the markets by determining Market Development Status in each time frame.
For each time frame, start with Prior Development Status which would be either Trending Higher or Lower or Balancing and use as basis. Determining the Current Market Development Status consists of comparing the High, Low, and Close of the Current Time Period Candle to the High, Low, and Close of the Prior Time Period Candle. The output from analysis on Monthly, Weekly, and Daily charts is Current Period Market Development Status and Current Bias.
I use the chart below as a rough guide. The inputs are in the first three columns of the chart below. First select Prior Market Development (Trending Higher, Trending Lower, Balancing), second select appropriate Current Period Candle High & Low relative to Prior Candle High & Low, third select appropriate Current Period Candle Close relative to Prior Candle High & Low. The outputs of analysis are in the third and forth columns of the chart below. They are the Current Period Market Development Status and Current Bias as mentioned above.
The Market Development Analysis is conducted at the end of each month when the Current Month Candle closes, at the end of each week when the Current Week Candle closes, and at the end of each day when the Current Day Candle closes.
The chart below can also be used as a guide for intraday Market Development Analysis on 30 minute candles after the close of each 30 Minute Candle.
Scenarios 1-8 represent a market that has been trending higher. Scenarios 9-16 represent a market that has been trending lower. Within the scenarios trending higher, I have listed them from strongest to weakest with scenario 1 being strongest. Within the scenarios trending lower, I have listed them from strongest to weakest with scenario 9 being the strongest.
Once in a trade that has been trending you look for continuation.
For a market that has been trending higher (which is defined by higher highs and higher lows) what should you look for to help gauge strength and odds of continuation?
1) Higher odds of continuation higher (scenario 1&2): Getting higher high and a close higher than high of prior candle, therefore continuing to one-time frame higher
2) Medium odds of continuation higher (scenario 3&4): Getting higher high, but close within prior candle, therefore getting excess high & balancing, but continuing to one-time frame higher
3) Lower odds of continuation higher (scenario 5&6): Not getting higher high, but close within prior candle, therefore getting excess high & balancing, but continuing to one-time frame higher
4) Higher odds of reversal lower (scenario 7&8): Getting close lower than low of prior candle, therefore one-time framing higher has stopped.
Note: In scenarios 4&6 the prior low was tested and rejected therefore one-time framing higher still intact. Need a close below low of prior candle to confirm that one-time framing higher has stopped.
For a market that has been trending lower (which is defined by lower lows and lower highs) what should you look for to help gauge strength and odds of continuation?
1) Higher odds of continuation lower (scenario 9&10): Getting lower low and a close lower than low of prior candle, therefore continuing to one-time frame lower
2) Medium odds of continuation lower (scenario 11&12): Getting lower low, but close within prior candle, therefore getting excess low & balancing, but continuing one-time frame lower
3) Lower odds of continuation lower (scenario 13&14): Not getting lower low, but close within prior candle, therefore getting excess low & balancing, but continuing to one-time frame lower
4) Higher odds of reversal higher (scenario 15&16): Getting close higher than high of prior candle, therefore one-time framing lower has stopped.
Note: In scenarios 12&14 the prior high was tested and rejected therefore one-time framing lower still intact. Need a close above high of prior candle to confirm that one-time framing lower has stopped.
The Current Bias from Long, Intermediate, and Short time frames need to be combined with analysis of Trade Location, Market Structure, and Ruling Reason to determine your own Overall Bias for the trading day ahead.
Don't fall into the trap of placing too much emphasis on any one piece of market information when making trading decisions. James talks about this all the time. Trading is never that simple. It is usually a combination of factors that are important. The name of the game is learning how to focus on the appropriate market information. Realizing that focusing on too much market information can keep you from making timely trading decisions and result in poor trade location.
I want to emphasize that the chart below is just a rough guide that I use. The Current Market Development Status column is meant to be more factual. The Current Bias column is much more subjective. Everyone sees things a little differently. The chart below indicates a Current Bias of Neutral/Higher on scenarios 3-6 and Neutral/Lower on scenarios 11-14. The Current Bias is Neutral because these scenarios show excess which could indicate the completion of the current auctions up and down respectively. However, the Current Bias for scenarios 1-6 is also Higher because the Current Market Development Status is One-Time Framing Higher and the Current Bias for scenarios 9-14 is also Lower because the Current Market Development Status is One-Time Framing Lower. Welcome to the land of Ambiguity and Opportunity. The important thing for you as a trader is to look at the facts and come up with your own Overall Current Bias that is based on market information from all time frames that is relevant to your style of trading.
To Shadow Traders,
A major part of your Market & Trading Narrative consists of Market Development Analysis for Long, Intermediate, and Short Term Time Frames. James uses a top down approach using Monthly, Weekly, and Daily charts to speed read the markets by determining Market Development Status in each time frame.
For each time frame, start with Prior Development Status which would be either Trending Higher or Lower or Balancing and use as basis. Determining the Current Market Development Status consists of comparing the High, Low, and Close of the Current Time Period Candle to the High, Low, and Close of the Prior Time Period Candle. The output from analysis on Monthly, Weekly, and Daily charts is Current Period Market Development Status and Current Bias.
I use the chart below as a rough guide. The inputs are in the first three columns of the chart below. First select Prior Market Development (Trending Higher, Trending Lower, Balancing), second select appropriate Current Period Candle High & Low relative to Prior Candle High & Low, third select appropriate Current Period Candle Close relative to Prior Candle High & Low. The outputs of analysis are in the third and forth columns of the chart below. They are the Current Period Market Development Status and Current Bias as mentioned above.
The Market Development Analysis is conducted at the end of each month when the Current Month Candle closes, at the end of each week when the Current Week Candle closes, and at the end of each day when the Current Day Candle closes.
The chart below can also be used as a guide for intraday Market Development Analysis on 30 minute candles after the close of each 30 Minute Candle.
Scenarios 1-8 represent a market that has been trending higher. Scenarios 9-16 represent a market that has been trending lower. Within the scenarios trending higher, I have listed them from strongest to weakest with scenario 1 being strongest. Within the scenarios trending lower, I have listed them from strongest to weakest with scenario 9 being the strongest.
Once in a trade that has been trending you look for continuation.
For a market that has been trending higher (which is defined by higher highs and higher lows) what should you look for to help gauge strength and odds of continuation?
1) Higher odds of continuation higher (scenario 1&2): Getting higher high and a close higher than high of prior candle, therefore continuing to one-time frame higher
2) Medium odds of continuation higher (scenario 3&4): Getting higher high, but close within prior candle, therefore getting excess high & balancing, but continuing to one-time frame higher
3) Lower odds of continuation higher (scenario 5&6): Not getting higher high, but close within prior candle, therefore getting excess high & balancing, but continuing to one-time frame higher
4) Higher odds of reversal lower (scenario 7&8): Getting close lower than low of prior candle, therefore one-time framing higher has stopped.
Note: In scenarios 4&6 the prior low was tested and rejected therefore one-time framing higher still intact. Need a close below low of prior candle to confirm that one-time framing higher has stopped.
For a market that has been trending lower (which is defined by lower lows and lower highs) what should you look for to help gauge strength and odds of continuation?
1) Higher odds of continuation lower (scenario 9&10): Getting lower low and a close lower than low of prior candle, therefore continuing to one-time frame lower
2) Medium odds of continuation lower (scenario 11&12): Getting lower low, but close within prior candle, therefore getting excess low & balancing, but continuing one-time frame lower
3) Lower odds of continuation lower (scenario 13&14): Not getting lower low, but close within prior candle, therefore getting excess low & balancing, but continuing to one-time frame lower
4) Higher odds of reversal higher (scenario 15&16): Getting close higher than high of prior candle, therefore one-time framing lower has stopped.
Note: In scenarios 12&14 the prior high was tested and rejected therefore one-time framing lower still intact. Need a close above high of prior candle to confirm that one-time framing lower has stopped.
The Current Bias from Long, Intermediate, and Short time frames need to be combined with analysis of Trade Location, Market Structure, and Ruling Reason to determine your own Overall Bias for the trading day ahead.
Don't fall into the trap of placing too much emphasis on any one piece of market information when making trading decisions. James talks about this all the time. Trading is never that simple. It is usually a combination of factors that are important. The name of the game is learning how to focus on the appropriate market information. Realizing that focusing on too much market information can keep you from making timely trading decisions and result in poor trade location.
I want to emphasize that the chart below is just a rough guide that I use. The Current Market Development Status column is meant to be more factual. The Current Bias column is much more subjective. Everyone sees things a little differently. The chart below indicates a Current Bias of Neutral/Higher on scenarios 3-6 and Neutral/Lower on scenarios 11-14. The Current Bias is Neutral because these scenarios show excess which could indicate the completion of the current auctions up and down respectively. However, the Current Bias for scenarios 1-6 is also Higher because the Current Market Development Status is One-Time Framing Higher and the Current Bias for scenarios 9-14 is also Lower because the Current Market Development Status is One-Time Framing Lower. Welcome to the land of Ambiguity and Opportunity. The important thing for you as a trader is to look at the facts and come up with your own Overall Current Bias that is based on market information from all time frames that is relevant to your style of trading.
