Range Bound Start to 2015 for US Stocks

Since the start of the year the US Stock market has been somewhat range bound making it hard for swing traders to get positioned for longer term trends. The market seems to have been up allot one day and then back down the next, making it increasingly hard to predict what’s going to happen next.

Let’s take a look at the Dow Jones daily chart below as an example. As you can see, there hasn’t really been a clear trend with smooth price action all year. During February was probably the only time when price had been reasonably predictable with clear momentum to the upside. However, apart from that price has been very erratic and hard to predict. This makes it difficult for those traders who rely on strong trends to get positioned on a swing trade basis as they may be finding they have a strong day one day to get them into a position however the next day the market sells off and their position follows suit. In markets like these sometimes it’s better to just trade on an intraday basis and go with the market momentum on a given day instead of looking for a longer run.

Beneath the market volatility that we see on the daily chart we can actually find some really nice trading conditions right down on the lower timeframes. Yesterday we saw a strong sell off across all US Stock markets and if you had drilled down to the low timeframes you would have been presented with some lovely price action. Below we have illustrated such price action on the 200 tick chart which if you aren’t familiar with tick charts is similar to say a 1-2 minute chart. Look at the smooth price action which is occurring on these lower timeframes. Price is trending strongly with clear direction moving downwards then pulling back into the moving average sell zone before moving away again. This is the type of chart that we should be looking to take advantage of.

Although we weren’t able to see clear direction on the higher timeframes it’s always worth digging a little deeper and adapting your trading according to the market conditions. If there’s no swing trading opportunities on offer you have to be able to adapt your trading to take advantage of whatever the market is offering.

Happy Trading!

Regards,
The TWP Team