TA is to men what horoscopes are to women. But the topic of trending vs ranging is interesting because it points to the stages of accumulation and distribution. I like the way Volume Spread Analysis explains how a market starts to range following market makers' plans. Specially in the book "The Undeclared Secrets that drive the Stock Market" In that text, the author explains that markets normally behave under a range following a plan of accumulation or distribution set by market makers. Sadly, most of the markets we trade on are driven by market makers and if we understand what they are trying to do, we might be in the right place to "crack the code". Which means that we have to understand how they are trying to manipulate a market. That is some TA I can buy.
MM's set and also react to what markets they make are doing. Which is what we all should be doing as well.
Sure, I'm no stranger when it comes to switiching between 1- and 5-minute charts. But for the sake of simplicity, can we stick to 1 timeframe? Otherwise, we will be all over the map. For instance, if you're to move up from 1M to 5M, why not up to 15M or 30M? I'm sure tick traders will want to use their own TF. But I get your point that you should zoom out and see the bigger picture, which I largely agree with. Anyway, let's continue with this later, perhaps with some visuals as well.
Let's do a realtime analysis (or as close as possible). This is the 5M chart of ES trading AH, which is normally inactive during the the Asian session. But no matter. It recently broke out of the range and is in the process of retesting it. If we go by the playbook, this would be a good time to enter long. But what I wanna know is will this turn out to be a trend or not. And if so, a strong trend or a weak trend. Think you know how this will turn out in advance?
I use the 3x3 SMA to gage the swing high and lows: 1) 3x3 SMA is a 3 period simple moving average displaced by 3 2) Look for cross of the 3x3 SMA 3) A close above/below the 3x3 SMA indicates the swing low or swing high 4) Draw a Fibonacci retracement from the swing high and low to gage trend strength
So it came back into the range to shake out the weak hands then resumed back up. But is this a trend though? With the tredline drawn in, it does look like a trend with a pullback. Now you tell me if this will be a strong or a weak trend.
In the overnight hours best to focus on the Nikkei during Japan trading hours and then European during Europe hours. That’s what is being actively traded.
Let's draw one more trendline to gause the strength. Oh, lookee there, it went up and reversed. If it's a "strong" trend, it should go higher though. So where will the next likely target be? Well, let's draw another horizontal line, shall we?