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How Do Markets Move
Move, Move and Move Some More
How do markets move? It’s a great questions and frankly opinions run wild. The actual structure of movements can be measured and quantified in numerical data however for this exercise I want to spend time on the visualization and art of the movements. Elementary price structure can be visualized with any tools, but I use pillars.
How markets move is extremely important to understand on a deep level. It will benefit to have price structure so familiar that you can spot the trading environment at first glance. There are many different environments and different types of structure. You might be asking yourself why this is important and it the reason is because if you truly understand this then you can quantify how the market is trading , how the move should look and what should not happen.
Here are some different trading environments.
The first environment in outlined in the lower blue lines is a trending range or sideways market. The second environment in slanted blue lines is a trading channel. The third environment outlined by the one blue trend line is a parabolic thrust or aggressive trend move.
This might sound extremely elementary however it is important to full understand. Markets tend to shift from one environment to the next and at certain times will remain undecided. This exercise is not so much to help predict price but to understand on a deep level the structure of price and how markets move. Continue to ask yourself how markets move, how markets don’t move and how is the market moving right now?
After spending some time understanding this add in the element of a price pillar or any other visualization of what a structure would be. Define each structure as a swing. Each swing is one pillar. You can begin to visualize the strength and weakness of the movement and or the market. You can use the structure to understand which environment is currently being observed.