E-mini Trading: volume and how it affects support and resistance

E-mini Trading: volume and how it affects support and resistance

I think if you analyze my e-mini trading style, its focus mainly focus on support and resistance. Although I strongly aware, order entry, data tick, standard deviation analysis engine, my trading center support and resistance. I am often asked question is: how do you know when the price action is to pierce the support and resistance levels and stop and / or support and resistance reversal?

Its ability to accurately predict price action will continue to support and resistance (SAR)?

I do not know of any single indicator, expressed clear support line and a resistance line near price behavior, but there are some clear signs that, as an e-mini trader, it should be strongly monitored when prices close support and resistance levels . The purpose of this essay, I will assume that you understand the basic principles of the SAR. In addition, most texts insist that this price action "œbouncesOFFA? SAR is a powerful sign of the relative strength of particular price.

Of course, to fully understand the SAR, you need to understand the context you are trading. In the stock market, individual stock issue is an unlimited supply, so that the consequences of supply and demand issues lighter than in the futures market. However, in the e-mini trading, we are working with a limited supply.

Why is there a limited supply and demand, e-mini trading it?

In futures trading, especially in e-mini trading, every buyer there is the inevitable result of the seller. This is called a zero-sum game, and gives a different set of trading rules to follow against New York Stock Exchange stocks. E-mini trading, buying or selling dried up, prices struggle to move higher or lower (depending on the direction of the trend). Market can only move when buyers and sellers can be matched together to form both the E-mini contract.

So to be clear, mini electronic trading is a zero sum game, which at all times must recognize and understand.

However, the "zero-sum game is not all bad, in order to market some very clear action must change direction, we can identify those actions and make a reasonably accurate forecast how the price action should be reflected in the support and resistance points.

For example, if the market is moving in an upward trend, and close to the known resistance, there are some secondary market action, we can observe. In order to change the direction of the market in buying patterns, traders buy and sell side must stop a group of the new E-mini traders will enter the market. Sellers began overtake buyer, the buyer will voluntarily or involuntarily forced to abandon their long positions. These two actions will affect the volume. Specific exit the market of buyers and sellers entering the market will lead to a combination of increased volume. When we see a significant volume of known resistance point, you should know that there is the possibility of reversal.

On the other hand, as described in the same section rising trend, the volume can be kept very low. Low resistance point amount that sellers have not yet entered the market, E-mini price action likely to continue through the SAR point is a distinct possibility. In short, the new buyers to keep buying and the seller did not enter the market.

Therefore, we can say:

The high capacity = reversal SAR great possibility

Continuation of the SAR = low volume moves a strong possibility

In summary, we have discussed the unlimited supply market and the difference between zero and the market. These market trading rules are completely different, especially in the SAR point. SAR point for the high capacity and low capacity reasons, it may result in a reversal or continuation of any of a trend. Finally, I would like to point out that there are exceptions to this general rule, assuming a reversal or continuation of actions before the wise observation of price behavior.