Limbo

Limbo

25-10-2022

10:59

The Market Structure thread🧵 Not like any other thread you see on this topic. I'll dive into it's components and explain everything. If you like this series of threads on TA, please hit like and retweet to show support. Let's get started. 1/

Market structure is a picture of evolved price action, which fluctuates and changes over any given period, moving upward, downward, or sideways. The outcome of these changes determines how the market is structured. •Trends •Pullbacks •Trend analysis •Trading Ranges 2/

1) Trends Trends produce some of the cleanest, simplest trades, and their structure is frequently characterized by a significant imbalance between buying and selling pressure. Though, market trends do not always occur. "Don’t fight forces, use them" - R. Buckminster Fuller 3/

Trend Pattern: Impulse -> Retracement -> Impulse 4/

These trend patterns work as a fractal. Structure inside a structure, based on the time frame you are looking at. Breakdown of this 3 leg structure will be followed in every timeframe. 5/

2) Pullbacks Usually, the market will enter a pullback after an impulse move. A pullback is a countertrend movement that goes against the initial trend's direction. In other words, a pullback in an uptrend are drops against the impulse move upwards that came before. 6/

3) Trend analysis We can analyze trends using several tools such as: •Price action •Trendlines •Indicators Price action: Price moves by making new highs in an uptrend & making new lows in a downtrend. 7/

Change of the trend/Trend reversal: For both uptrend & downtrend. Step 1: Break the higher low/lower high Step 2: Form a new low/high Step 3: Form a lower high/higher low for the confirmation of trend reversal. 8/

The very basic fundamental idea of trends was also discussed in the previous thread. Please give it a read. You will also understand the psychological phases a trend goes through + Price action involved. 9/

The same trend analysis and trend reversal techniques can be used through trendlines and indicators. Using trendlines: Same technique is used. Use the lows to draw a trendline in an uptrend. Use the highs to draw a trendline in a downtrend. 10/

Using indicators like moving averages(MA): Same technique is used. MA shows the starting of the trend using crossover + provides support for the continuation of the trend. 11/

4) Trading Ranges There's one type of trend left, which is sideways movement/range. When the price doesn't move in a particular direction, it starts moving sideways. This sideways consolidation can act as an accumulation, distribution, or trend continuation. 12/

That concludes the Thread. It was more of a introductory thread, if you want me to dive deeper and explain each component in detail then let me know in the comments.



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