econintersect .com

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 28 December 2017

Where Will Price Turn, Where Will It Go To?

by Sam Seiden, Online Trading Academy

Online Trading Academy Article of the Week

24/7 market analysis... financial news TV shows, Youtube channels, Podcasts and so on focus on analyzing economic reports, corporate earnings and so much more. Most of the time, you have a panel of financial experts arguing whether a number is good or bad for markets. In this day and age, this type of analysis and reporting is endless.

Please share this article - Go to very top of page, right hand side, for social media buttons.

Think about this... What is the goal of all that talk, debate and analysis? Often, you have two ivy league economists debating an economic report, and they both sound correct. My big question, again, is this... What is the goal of all that market analysis and debate? At the end of the day, isn't all the talk to figure out where market price is going to turn and where price is going to go? If these are the two questions that the 24/7 talk is aimed at figuring out, why not just focus on that? Meaning, skip all the talk and analysis and go right to the only two questions that matter. Literally, don't consider the news, the data, opinions or anything else. Skip all that and focus on the only information that matters. Here is how we do it...

I have been in the trading business for nearly 20 years as a trader, fund manager and educator. I began on the floor of the Chicago Mercantile Exchange on the institution side of the business. What was clear to me then, and will be forever, is that how prices move in any and all markets is a function of a simple supply and demand equation. Trading or investing opportunity exists when this simple and straight forward relationship is out of balance. How do we see this on a price chart?

  • Where will price turn in a market? Price in any market turns at price levels where demand and supply are out of balance. Meaning that, unfilled buy or sell orders cause price to turn.
  • Where will price go? Price moves easiest through price points where you don't have a significant supply and demand imbalance. Meaning that, price points where orders are filled make it easy for price to move, keep going.

Notice the area labeled "unfilled sell orders" is the origin of a strong decline in price. This is exactly where the significant sellers (banks) are selling; we call this a Supply Zone. Next, notice how quickly price rallied up to supply where I sold short. Price then turned lower and reached the profit target.

Price turned because it reached a price level with significant "unfilled" sell orders. It then moved quickly lower because it was moving through an area where most of the orders were filled, a lack of unfilled buy orders. There are a few rule-based items we look for in the two pictures that represent filled and unfilled orders. For example, in the circled area, notice the large amount of trading that took place and the wide and whippy action. This is the picture of filled orders. If that was not the case and there was a large amount of unfilled orders, the picture would certainly look opposite of what it does, like the unfilled orders supply levels above.

Keep in mind that any and all influences on price are reflected in price. Whether you trade Stocks, Futures, Forex or Options, understand that behind all the candles on your screen in all these markets are people and their buy and sell decisions. The picture of filled and unfilled orders on a chart is crystal clear if you know what you're looking for. The biggest issue is that everyone is doing market analysis and arguing over data and reports instead of focusing on the only two questions that matter. It's a big step toward simplicity which most will never be comfortable with. So much truth in the world is cluttered with... well just that, clutter. If you care about your hard earned money, you may not want your money mind to be cluttered with anything that doesn't directly put more money in your pocket.

To summarize - Unfilled orders cause price to turn. Filled orders facilitate price movement.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Investing Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Econintersect Investing

Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved