The key to early recognition of potential change in structure is in observing and identifying “SOMETHING DIFFERENT”.
I absolutely love this example which has been building now since the beginning of the year.
This does not mean that the uptrend will end.
It’s just a warning sign.
A clue that the sentiment driving the market prior to this date has changed in some way.
A clue that there is “potential” for a change in market structure.
And for those of you who recognise this clue, the potential to more quickly adapt to any change in structure as it happens, or even before the technical change has occurred.
(By the time I publish this article the market may well have made this change. Be sure to check out the charts if you wish to see what happens next.)
For those of you who wish to join the ranks of professional traders, this is a skill you need to build. Quickly recognising and adapting to changes in the market.
And step one in that process is early recognition of “something different”.
All markets.
All timeframes.
I’m just stunned by that last fact.
Skip the table below if you wish, but I personally find it amazing! (Yep… I’m a charting nerd!)
| 3rd Jan: Mid-Close Range | 1st Feb: Mid-Close Bull | 1st Mar: Mid-Close Bull |
| 4th Jan: High-Close Bull | 2nd Feb: Low-Close Range | 2nd Mar: Low-Close Range |
| 5th Jan: High-Close Bull | 3rd Feb: Mid-Close Range | 3rd Mar: High-Close Range |
| 6th Jan: High-Close Bull | 6th Feb: High-Close Range | 6th Mar: High-Close Range |
| 9th Jan: High-Close Bull | 7th Feb: Low-Close Bull | 7th Mar: Low-Close Range |
| 10th Jan: Mid-Close Bull | 8th Feb: High-Close Range | 8th Mar: Mid-Close Range |
| 11th Jan: High-Close Range | 9th Feb: High-Close Bull | 9th Mar: High-Close Range |
| 12th Jan: High-Close Range | 10th Feb: High-Close Bull | 10th Mar: Mid-Close Bull |
| 13th Jan: High-Close Bull | 13th Feb: High-Close Bull | 13th Mar: High-Close Bull |
| 16th Jan: Low-Close Range | 14th Feb: High-Close Bull | 14th Mar: High-Close Range |
| 17th Jan: Mid-Close Bear | 15th Feb: High-Close Bull | 15th Mar: High-Close Bull |
| 18th Jan: High-Close Bull | 16th Feb: Mid-Close Range | 16th Mar: Mid-Close Range |
| 19th Jan: Mid-Close Range | 17th Feb: High-Close Bull | 17th Mar: Low-Close Range |
| 20th Jan: Mid-Close Range | 20th Feb: High-Close Bull | 20th Mar: Mid-Close Range |
| 23rd Jan: High-Close Range | 21st Feb: Mid-Close Range | 21st Mar: Low-Close Bear |
| 24th Jan: High-Close Bull | 22nd Feb: High-Close Range | |
| 25th Jan: High-Close Bull | 23rd Feb: Mid-Close Bear | |
| 26th Jan: Low-Close Range | 24th Feb: High-Close Range | |
| 27th Jan: High-Close Range | 27th Feb: High-Close Bull | |
| 30th Jan: Mid-Close Bear | 28th Feb: Mid-Close Range | |
| 31st Jan: High-Close Range |
(See here if you’re not familiar with this form of candlestick classification – Parts: One Two Three Four Five )
The key to early recognition of potential change in structure is in observing and identifying “SOMETHING DIFFERENT”.
In a stable trend, watch for changes in volatility, or in the pace of the trend. Watch for changes in the way that price swings project beyond the previous swing high or low. Or in changes to the depth of pullbacks. Or, as in today’s example, watch for a sudden and strong move counter-trend.
In a stable sideways market, watch again for sudden changes in volatility. Or sudden and dramatic increases in volume. Or (one of my favourites) watch for signs of price compression towards either the upper or lower boundaries of the range.
Something different in the way that price has been moving.
Observe it.
Question it. What could it mean? Could this in any way provide a clue to a potential change in structure?
Now… watch and adapt.
Happy trading,
Lance Beggs