S&P 500 IndexEducation
Time and Price… Geometry
Updated
Plato had an inscription over his academy
LET NO ONE IGNORANT OF GEOMETRY ENTER HERE
Modern trading, especially on lower timeframes relies on indicators hence price action can be a nebulous concept for traders
What is price action?
Price action is the visualisation of price fluctuations on the y axis versus time on the x axis. On the shorter timeframes this can indeed be dominated by the high frequency algorithms: hence the random walk theory. But despite the algos, market trends can be deciphered on even the shorter timeframes: with higher lows and higher highs in an uptrend; lower highs and lower lows in a downtrend; and the absence of either in a ranging market.
Longterm timeframe price action: GEOMETRY
Whilst the random walk is concluded for even longer timeframes: the student of geometry will always be able to decipher order out of the chaos. Here we have a 3 year spx chart. If we box the price action: what we can see is PRICE has been perfectly squared with TIME for 3 years. We had an impulse move off the lows in 20 months and a correction of half that range in 10 months. Since then we have had consolidation and a breakout. The breakout is confirmed by price breaking the downtrend from the ath to the swing low in October 2022.
Using an Andrews pitchfork off the low following then Corona crash; the ATH and the October low: we have a clear new ATH median line target.
Using our pitchfork to now frame that macro geometry: we can decipher price action as it moves to target. Of course price action may fail in its proposed trajectory. Doctor Alan Andrews hypothesised an 80% probability for such a move; and Greg Fisher validated this in his median line study on Grains.
Geometry… the order out of the seeming chaos of price action
Footnote: all of the above brings us to the stunning conclusion that spx is not in a bear market but has merely corrected the impulse move since the corona drop by 50% in 50% of the time of the impulse; and that new highs are the most likely (but not guaranteed, of course) outcome here.
LET NO ONE IGNORANT OF GEOMETRY ENTER HERE
Modern trading, especially on lower timeframes relies on indicators hence price action can be a nebulous concept for traders
What is price action?
Price action is the visualisation of price fluctuations on the y axis versus time on the x axis. On the shorter timeframes this can indeed be dominated by the high frequency algorithms: hence the random walk theory. But despite the algos, market trends can be deciphered on even the shorter timeframes: with higher lows and higher highs in an uptrend; lower highs and lower lows in a downtrend; and the absence of either in a ranging market.
Longterm timeframe price action: GEOMETRY
Whilst the random walk is concluded for even longer timeframes: the student of geometry will always be able to decipher order out of the chaos. Here we have a 3 year spx chart. If we box the price action: what we can see is PRICE has been perfectly squared with TIME for 3 years. We had an impulse move off the lows in 20 months and a correction of half that range in 10 months. Since then we have had consolidation and a breakout. The breakout is confirmed by price breaking the downtrend from the ath to the swing low in October 2022.
Using an Andrews pitchfork off the low following then Corona crash; the ATH and the October low: we have a clear new ATH median line target.
Using our pitchfork to now frame that macro geometry: we can decipher price action as it moves to target. Of course price action may fail in its proposed trajectory. Doctor Alan Andrews hypothesised an 80% probability for such a move; and Greg Fisher validated this in his median line study on Grains.
Geometry… the order out of the seeming chaos of price action
Footnote: all of the above brings us to the stunning conclusion that spx is not in a bear market but has merely corrected the impulse move since the corona drop by 50% in 50% of the time of the impulse; and that new highs are the most likely (but not guaranteed, of course) outcome here.
Note
Greg Fisher Median Line Study- a great primer on market geometry and validation of Doctor Alan Andrews’ work dl.abcbourse.ir/dl/Library/book/using median lines an emipirical study.pdf
Note
Using market geometry we can extrapolate a target of 5200 for spx in July 2023, this of course may fail to to realise. But it is probable.Note
*Using market geometry we can extrapolate a target of 5300 for spx in July 2023, this of course may fail to to realise. But it is probable.Note
Apologies for the typos my tradestation is a 6 inch phone so editing is somewhat difficult but hey unpicking geometry doesn’t require a fancy set up or multiple indis. You just need to be able to identify swings and read PA. You don’t even need the pitchfork tool…Note
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.