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Traders turn profits by anticipating price movement. Although
this sounds simple, many market participants don't understand
how to locate impending change.
Stock
prices move back and forth endlessly. But when do
these common swings represent good trades and when are they just
dangerous noise? One answer lies in the relationship between
price and time.
The singular goal of trading can be defined as
locating price expansion just before it happens and
taking a position to capitalize on the event. When
price moves a greater distance over a lesser period
of time, individual chart bars and candlesticks
expand in length. This range expansion signals those
points of greatest opportunity for traders and
investors.
Clear Air identifies horizontal chart
levels where prior stock trends
exhibited sharp price expansion in
either direction. The stronger the CA
event, the more likely that price will
trigger volatility on the next pass.
This tendency allows traders to locate
outstanding
trades with little more
than quick visual scans of their
favorite
stock
charts. CA prediction is
simple: the more often those bars expand
through the same levels, the more likely
expansion will continue.
Congestion
limits volatility. Range expansion represents
the state of least congestion and greatest
volatility. However, it cautions traders to
manage risk closely as opportunity and danger
stand side by side. Although price may have
sharp momentum in one direction, defense
trading must be exercised. Clear
Air space can produce violent reversals.
Predicting natural swing points in pre-existing
Clear Air utilizes only known support/resistance
and
fibonacci
retracement levels. Since traders
tap detailed price and volume from prior
passages, those points can be used for
cross-verification to reduce risk. High
probability setups can be easily identified with
natural entry and exit triggers.
Clear Air exists at new highs and lows as well
as prior price breaks and trends. But locating
safe positions in this Clear Air requires
detailed fibonacci projections and may lead to
conflicting outcomes. Only disciplined traders
should play on this dangerous field. Major
breakouts and breakdowns often print few
congestion and swing points that
traders can use to identify
support/resistance. And positions must be taken
without the benefit of information from prior
passages through the same price levels.
Fibonacci and Clear Air: Apply a
fibonacci grid after a Clear Air series
to reveal hidden reversal zones not
apparent during the event. Try placing a
grid over new sharp expansion moves to
anticipate where opportunities will
emerge on next retracement swing. When
trading Clear Air, always rely on the
chart in the next smaller time frame to
locate low risk entry and exit levels.
