Trading Emini S&P With Multiple Timeframe STOPD Levels
By LawrenceThis is a simple walk-thru of what happened during the day on Feb 27, 2014 on Emini S&P. It illustrates a way to utilize data from multiple timeframes to identify the key price levels for making trading decisions. It is not that difficult. It just takes a different way to see the market.
Note: Am still learning how to use this screen capture tool
Right After Open
Snapshot at 9:38 am.
I was looking for a test of the bright red zone of 1844-45 on the real-time price levels tool. It is key price level across multiple timeframes. If it can hold ES down, it would dump.
10 AM Mrs. Yellen’s Show
Snapshot at 10:00 am.
We got the drop as expected.
Where did Emini S&P find support? Right between previous day low (PDL) and AM (afterhour midpoint).
Right after 10 am, the price shot.
Clues are now given to us:
1. Previous day low was not tagged
2. Afterhours midpoint acted as support
My Time Map and STOPD readers would know what to look for – it is the other ends of #1 and #2 in play.
Lunch Hour
Snapshot at 12:38 pm.
One of the other ends, afterhours high (AH), was tagged. The day trading target R1 was also tagged.
Some people would think that it is time to go short but we know better because 1849 is not really of any importance relative to the 1844-45 zone. That zone is now support and its matching resistance is way up at 1856-57.
1 PM Continuation
Snapshot at 1:41 pm.
Emini S&P zoomed higher again but stopped suddenly at 1852-53. Again, many people think of excuses to go short just because they think so. That was just a normal net up 10 points stopping zone. Bots like to unload their long positions there. Nothing more.
1 pm new high already give us a good reason to stay bullish (one of the Time Map ebook biases).
2 PM Pullback
Snapshot at 2:34 pm
The only significant price level from the day high looking down was afterhours high (AH) at 1847. So a pullback naturally move down there for a pause. Aggressive day traders can take advantage of the void zone to pocket a few points. But until this support is cleared, there is no change in trend to signal any further weaknesses.
End of Day
Snapshot at 4:00 pm
No break of afternoon support zone. Last 10 minutes melt up to close at high of day.
Whole day, Emini S&P was just playing hide and seek around the 2 key price levels from the higher timeframes. By knowing that in advance, you have your roadmap in place with confidence. Isn’t that better than struggling against the market all day?
Indicator And Price Series Do Not Really Give You The Complete Picture
Those who does not know about the importance of STOPD price levels across all the major timeframes often believe the limited amount of data and the derived indicators on their charts represent the whole picture of the market dynamics. It is not their fault that they choose to see the market this way. After all, it is how we are all led to believe.
I intentionally put the moving averages in the chart to confuse you. They do not really produce meaningful signals I am aware of. You can argue all day that you have this indicator combined with that indicator with your secret sauce which points to a buy all day. If this works for you, that’s fine. But does it?
The truth is that the intraday price actions are just pinball actions around these more important higher timeframe price levels. Not all price actions are meaningful. The serial movements of the price often mislead people to believe what they want to believe. Overbought, oversold, moving average crossover and many other signals are meaningless if there is no context supporting them. Without a powerful context shaping the condition, these trading setups and signals are just excuses to support one’s subjective decisions.
The most important clues on where the market is heading are there all the time, the problem is that people tend to ignore them.
Summary
Now that you have learned the importance of higher timeframe key price levels. It is time to at least getting yourself familiar with them. I have the STOPD price levels of various timeframes for many instruments listed in the Daily Cheatsheets. They are updated daily and freely available for anyone to use as reference.
The real-time price levels tool is a convenience for people who trade frequently. If you are a position trader beyond the day trading / swing trading timeframe, the interaction of real-time price development does not matter that much to you. In that case, using the STOPD price level tables is quite sufficient.
The real-time price levels tool is available to our premium members.
Much appreciated, LC. Many thanks for shining the light – once again. Just one question for now. Why the 4 min timeframe? I’ve never heard you refer to it anywhere other than here and in the archive posts. I’m guessing it may be for convenience and ties in with the day start at 09:28 and somehow allows you to project future pivot values – but that is just my dumb guess. Ah – just one extra question. I understand you’re demonstrating the STOPD principle and the indicators shown are not needed to support the discussion, but “in real life” do you keep tabs on the Trin? Again, I don’t recall you mentioning it since several years ago in the Neoticker blog.
Thanks,
Al
I forgot to switch to 5 min timeframe to create the chart. LOL =)
4 min is special in many ways. It gives you an advantage to fire off early warning on the 30-min mark. It is also somehow more “accurate” in terms of indicator readings. I will post about that in the future.
I have real-time mechanical models based on multple breadth readings, TRIN is one of term.
I really appreciate these analysis, helps us learn about your day-to-day thought process. Much thanks!
I like that secret sauce part… brings in humour…. the colour intensity of the tool shows the importance of that particular level, but that 1847 level AH is not that red, how do we usually guage in such cases?
You missed the point. The more important higher timeframe price levels do not automatically translate into high probability real-time trading setups. They give you a roadmap. i.e. the main intersections of the route the car is going thru.
The AH support is real-time bias is what we talk about often in the real-time chat room. Its behaviour is very much STOPD based application.
Hello L, out of curiosity what are the two moving averages you used?
I don’t remember what they are because I do not use moving averages. Looks to me they are 20 and 50 period SMA.