Many traders suggest indicators that may help in identifying the market trend and I know it. But I saw most of the indicators work below average to let you know of the upcoming trend shift. In that regard, how can I fundamentally view the market? Any tips?
Charting, higher lows=means trending up. Lower highs= trending down. Highs and lows bouncing sideways is chop. I use dailies/weeklies to get idea for longer trends even I am a counter trend trader. I close beyond a pivot is definitely trend change.
What Handle mentioned are for the most part true. But you gotta have something to measure the fair value of that trend. That is the only way to know if the trend is overbought or oversold and won't flip on you, eg "trend shift".
I would add to looking for a trend change, add a measure of two things: 1) How long the existing trend has gone on. 2) How long since it last changed. The idea is trends are not measured unto themselves. Rather, trends are measured within a series of trends. e.g. if a trend changed quickly, and then quickly again, that is VERY different than a very long trend that has not changed in a long while. Hope that makes sense.
Dear Jorge if you could find an accurate indicator that would lead you to a trend, you would be swimming in cash. That's the golden nugget.
I don't swing trade and very most I can target is 10pts on one system but generally scalp up to 9 ticks. Where you mention over bought or oversold, those are areas am looking for to scalp. Study those patterns a few years, found more reliable than going with the trend. I believe more false patterns happen on trending patterns.
Well, I believe you're also a seasoned trader so I'll save myself from going into details. But far too many noobs neglect to see things from the professionals' point of view. Don't merely look at where the next leg might end but ask yourself where the next trap will be set up by the whales. Can that be detected or measured in advanced? You bet.
There are many ways to do it, but unfortunately, none of them works all the time. If you’re a technical trader, what I would suggest is to start looking ‘under the hood’ by closely following all 30 stocks in the Dow Jones index. (it’s a good enough sample of mega caps to get you started). These stocks will tell you what is holding up the market or where problems are beginning to develop. Each day, mark up all the levels on these 30 stocks, and note the PA and volume behaviour in these stocks. Then mark up the SPX, NASDAQ, and RUSSELL (IWM), and observe how they correlate with these stocks. I’d suggest marking up the stocks first before the indices because it’s the stocks that move the indices. After a while, you should start developing a feel for the market, and you'll begin anticipating consolidations, breakouts, and reversals, rather than reacting and getting caught off guard.