Get started

Equilibrium

Premium & Discount Price Delivery in Institutional TradingGreetings Traders! In today's educational video, we will delve into the concepts of premium and discount price delivery. The objective is to provide you with a comprehensive understanding of institutional-level market mechanics. Before we proceed, it is crucial to define what we mean by "institutional level" and "smart money," as these terms are often misunderstood. We will also address the common misconceptions about who the liquidity providers are in the market. By grasping these foundational concepts, you will gain a new perspective on the market, realizing that its movements are not random but calculated and precise, orchestrated by well-informed entities often referred to as smart money. If you have any questions, please leave them in the comment section below. Best Regards, The_Architect
Editors' picks
Education
by The_Archi-tect
10
XLV is in tight equilibrium; will break soonAMEX:XLV has formed a five-week equilibrium. The price contraction is already quite tight, indicating that this equilibrium could break very soon. The context is highly bullish: the XLV price is on a weekly uptrend, and the broader market is also showing strong performance. The odds are in favor of an upside breakout. On the chart, there is an example of a possible trade. Please note that while I’m not a fan of diagonal levels, I’ve drawn the triangle solely to illustrate the idea of equilibrium Disclaimer I don't give trading or investing advice, just sharing my thoughts.
AMEX:XLVLong
by hermes_trisme
Why You Should Avoid Trading Standard Patterns: Deeper AnalysisTrading based on technical analysis is a popular way for traders to identify market opportunities. One of the most common methods of technical analysis is the use of chart patterns. These patterns are recognizable formations created by price movements on a chart. Traders use these patterns to identify potential areas of support and resistance, as well as trend reversals. However, there are several reasons why you should avoid trading standard patterns: 1. Widespread Awareness and Anticipation: Standard patterns are well-known and widely anticipated by market participants. This means that they are already priced in, making trading them a low-probability strategy. 2. Potential for False Signals: The formation of a pattern on a chart does not guarantee the expected outcome. In fact, standard patterns can often lead to false breakouts and failed trades. 3. Difficulty in Trading Effectively: Trading standard patterns effectively requires a high level of skill and experience. Without a deep understanding of market structure and price behavior, traders can easily fall victim to false signals and whipsaws. Advantages of Trading Liquidity Patterns: Liquidity patterns offer a more effective and reliable alternative to standard patterns. These patterns are based on the concept of market liquidity, which refers to the ease with which an asset can be bought or sold without impacting its price. By identifying areas of high and low liquidity, traders can gain an edge in the market. In-depth Analysis of Popular Patterns: 1. Double Bottom: The classic double bottom pattern is a bullish reversal pattern that forms when the price of an asset makes two consecutive lows at the same level, followed by a rally. However, the standard double bottom pattern has a significant drawback: it leaves liquidity below the lows, which can lead to false breakouts and failed trades. A more effective way to trade this pattern is to look for a lower low. This occurs when the price makes a new low below the previous two lows. This indicates that the market is absorbing all the sell liquidity and is ready to move higher. 2. Triangle: A triangle is a consolidation pattern that forms when the price of an asset ranges between two converging trendlines. Traders often look for breakout trades in triangles, but this can be risky. False breakouts are a common occurrence in triangle patterns. This is because market makers often manipulate the price to induce traders to break out of the pattern, only to reverse the price and trap them in losing trades. A more effective way to trade triangles is to look for liquidity grabs. This occurs when the price moves outside of the triangle, only to quickly return back inside. This indicates that market makers are taking liquidity from the market and are preparing to move the price in the opposite direction. Practical Tips for Trading Liquidity Patterns: Always trade with the trend. Liquidity patterns are most effective when they are traded in the direction of the overall trend. Use stop-loss orders to protect your downside. This will help to limit your losses if the trade does not go your way. Be patient and wait for the right setup. Don't force trades and only take those that meet your criteria. Additional Considerations: Market context: It is important to consider the overall market context when trading liquidity patterns. For example, patterns are more likely to be successful in trending markets than in range-bound markets. Risk management : Always use sound risk management principles when trading, regardless of the pattern you are using. This includes using stop-loss orders and position sizing appropriately. False signals: It is important to be aware of the potential for false signals when trading liquidity patterns. Not all patterns will lead to successful trades, and it is important to be prepared for losses.
Education
by Yaroslav_Krasko
3
HTF perspective of EURUSDAt the time being the market is internally bearish so we could aim for the price to come into the demand area of the extreme of the bullish structure. With that said at the time being, the price is showing indecision, after mitigating an area of weak demand. However, the price is at an equilibrium area and could be forming a new swing higher low to reach higher highs. conversely, I am more willing to aim for lower prices in strong demand areas before aiming for higher highs on EURUSD
by GonzeeTrading
MSFT Reaches Equilibrium within Its DowntrendPrimary Chart: Weekly Chart of MSFT Showing Down Trendline, 200-Week SMA, Key VWAPs and Fibonacci Levels Microsoft Reaches a State of Equilibrium within Its Downtrend Equilibrium means "a state of balance." Equilibrium has been reached precisely because MSFT is holding above long-term support, and below its primary downtrend resistance levels. It also has been acting bullishly (the failed breakdown today already discussed). SPX remains in a very tight triangle pattern, and this likely resolves soon (as the apex is approaching rapidly), perhaps after the February 1, 2023 FOMC. MSFT will likely follow suit with whatever direction SPX takes after that key decision. Markets seem to be interpreting every bit of news bullishly at the moment, giving even negative headline a positive spin. This should not be surprising, as markets do whatever they want, and this favors technical analysis. So markets may continue fighting the Fed even if nothing new is stated at the FOMC presser on February 1, 2023. SquishTrade will briefly summarize key technical points concerning Microsoft Corporation NASDAQ:MSFT . This firm reported earnings yesterday after the closing bell. Initially, the stock popped vigorously on what appeared to be earnings that were not as bad as feared. But when it gave guidance on its earnings call, the firm fell just as violently. During trade today, however, the forces buoying markets helped MSFT recover back above its uptrend line that runs from early January 2023 lows. This "failed breakdown" is short-term bullish from a technical perspective. Upside price targets have a lot of obstacles in their path given that the primary-degree downtrend remains intact from all-time highs in late 2021. Thus, any upside price target should be viewed as tenuous and conditional on substantial further progress in major indices (SPX / NDX). Upside price targets include two alternative Fibonacci and measured-move projections as well as major resistance from previous swing highs (blue rectangle) and down trendline resistance. Downside support remains at the 200-week SMA as well as the uptrend line off 2022 lows (dark blue). Conditional upside price targets 1. If SPX breaks its triangle pattern (approaching its apex now) to the downside, upside price targets should be invalidated. The FOMC presser on February 1, 2023, may be a critical turning point for markets. 2. Provided markets continue pushing higher, with pivot-hopeful stocks leading the way, and provide SPX breaks above its triangle pattern even if only for a few weeks, MSFT can reach $254.67 (which it reached after hours yesterday after the earnings report), and the 200-day SMA also aligns with this level (not shown) as of today. The down TL also lies near this area. If the downtrend line is broken convincingly, $261-$263 can be considered a more aggressive upside target, with the most aggressive target around $270-$273. 3. Downside support remains at the blue uptrend line from 2022 lows. Shorter-term support at the parallel channel from January 6, 2023, lows is also important. This support held despite a volatile whipsaw below it today after earnings were reported. Importantly, this post does not intend to imply that the Fed will pivot. No one knows when that happens, and the Fed has been stating that it intends to keep rates higher for longer, above 5% for all of this year. But mention of a pause by the Fed, or a discussion of a pause by the voting members, can fuel further rallies especially in technology stocks by participants who perceive this (perhaps incorrectly) as a pivot. Summary of key technical evidence : MSFT's weekly chart shows MSFT holding above an upward sloping 200-week SMA after piercing this long-term MA a couple of times. But the down TL from MSFT's all-time high remains intact. In fact, MSFT's down TL has not been attacked the way that SPX and NDX's down trendlines have been in recent weeks. Key VWAPs from all-time highs and from mid-August 2022 highs remain intact as well. The mid-August 2022 VWAP was resistance today, though barely so. The VWAP from the lows of 2022 was recovered today after a failed breakdown below it after earnings yesterday. MSFT has been forming higher lows (and higher highs) since its low in 2022. An uptrend line can be drawn from the October 2022 low to the present price bar. MSFT's candle this week has formed a doji—a technical signal of indecision (and equilibrium between buyers and sellers). This has followed large moves up and down in volatile trade after earnings were reported this week. MSFT experienced a failed breakdown below recent support and the shorter-term uptrend channel after earnings. This is short-term bullish suggesting the possibility of further upside. A major horizontal zone of resistance from 260-270 has rejected price firmly since late August 2022. MSFT may follow the direction SPX takes out of its consolidation triangle, where price is rapidly nearing the triangle's apex. Additional Charts Supplementary Chart A Notice how MSFT's price reclaimed the VWAP from the November 2021 low. That seems bullish. But it also failed at the anchored VWAP from the August 2021 high. That seems weak. This is yet additional evidence of the equilibrium between buyers and sellers, perhaps waiting to see if the Fed remains hawkish or if markets rally no matter what the Fed says, because the market has resolutely refusing to believe the Fed's dot plot anyway. Supplementary Chart B Notice this logarithmic linear regression channel's upper edge (+2 standard deviations) coincides with the downward trendline from the 2021 peaks as well as with the major area of resistance / supply (the blue rectangle shown). Concluding Comments Lastly, SquishTrade will address a few issues relating to the forces that appear to be at work as equities, including MSFT, rise higher despite bad news. It appears that markets are eagerly anticipating a Federal Reserve pivot or pause of some sort in the near future. There is some disconnect between what the Fed has said and what markets believe. Markets have priced in rate cuts later this year in fact, and the Fed's dot plot from the most recent FOMC meeting shows 5.1% as the terminal rate to be held throughout the entirety of 2023 with *no cuts anticipated.* Many believe that this Fed approach will soon change, as reflected by equity prices and Fed Fund futures pricing in rate cuts. Further, FOMO, combined with short covering, and CTAs that trade strictly with momentum in whatever direction, have driven prices near mid-December 2022 highs in the indices. Disinflationary trends have caused investors to believe that inflation is history. While inflation may have reached its peak, certainty about whether it will return to the Federal Reserve's target of 2% remains elusive. Will sticky inflation keep monetary policy tight for the remainder of the year? Will the market be proved wrong and ultimately decline to new lows because the Fed's view is right and the markets are fighting the Fed? Will the Federal Reserve pause hikes and hold rates higher for longer until more evidence appears that inflation is well on its way to the target? No one knows the answers to these questions, but they are relevant to what is happening in markets right now. If the market is wrong about inflation quickly returning to the Fed's target, or if the market is wrong about a "soft landing" (earnings and the economy not falling into a major downturn), then markets will quickly and viciously reach new lows. Until these become more apparent, expect prices to remain buoyed in MSFT and other major names. Thank you for reading, and Happy New Year / Feliz Año Nuevo! ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
NASDAQ:MSFT
by SquishTrade
2
DXY Testing the Equilibrium on the Daily. On the daily time frame, we see DXY has respected the Equilibrium, instead of breaking through it, it has bounced off and turned back towards the upside. This confirms the two scenarios, well actually three scenario cases. First Scenario: Price is ready to run with the bulls and we see stronger pullbacks to the upside, higher highs, and higher lows back toward the premium. This would mean the Dollar gains strength, a possible break into EQ (103.46- 102.74) before reversal back towards premium. Second Scenario: Price is ready to drop with bears and we see a stronger push through Equilibrium, breaking 102.74 and heading towards the discount. This would mean the Dollar would continue to weaken. Third Scenario: Possible consolidation around (102.74-103.46) area as it is a key zone which could mean the price could hang around for a few days deciding which way to go. This would mean the Dollar would go sideways not breaking too high or low for a few days. Goal: Catch the trend of the dollar strength when trading the other pairs. If it's going up we are buying, If it is going down we are selling. My Plan: If it respects equilibrium wait for a breakout to the upside, then set a pending order for a buy to the next level of interest with SL below equilibrium. If it enters the equilibrium wait for it to touch the bottom and see if respects it, set a pending buy order at the top of the equilibrium with sl at the bottom. if it breaks through it, set a pending sell order at the bottom of the equilibrium with sl at the top. If it breaks the equilibrium wait for a breakout to the downside, then set a pending order for a sell to the next level of interest with sl above equilibrium. Outlook: This could take some time to form as this is a key area for the Dollar right now. Be patient, and set alerts for the zone.
TVC:DXY
by DigitalPlug
Weekly Review (Ending 123022)This past week was the last week of trading for the year and man, did it feel like it. The first two days of the week, Tues. and Wed., were clean. I noted earlier in the week that I wanted to see 3780 as an objective but, after being wrong analysis, the Daily Time Frame told a different story. It is at Equilibrium, which Price is likely to consolidate. So, with it being the last trading week of the year and Price being at Equilibrium, It was more likely for Price to have a Consolidation Weekly Profile. Green Check = Correct Bias Red X = Wrong Bias Grey Circle = No Bias/Did not trade/Neutral
CME_MINI:ES1!
by FreddyFutures
BTCUSD expected Path (bigger picture)Recently I was following BTCUSD through its consolidation up until break of structure last Friday 6/10. That series was a local analysis/predictive tool using continuous-time markov chain (CTMC). This is a bigger picture analysis using charting techniques centered around supply/demand trendlines and a statistical method I developed in R studio that measures proportional range w.r.t. a displacement control chart (based on price action relative to the 9 and 20 day moving averages (as well as the relationship between those moving averages)). There is a post from someone I follow that has what I think is the most accurate Elliot Wave coverage of BTCs count, which has some levels that align in the neighborhood what I am getting using this method. Here is a link to that post (@Nailed_it, hope you don't mind if I link this idea - if so lmk and I'll obliterate my post): If you want the details follow that ^ Below is more of a general idea for upcoming path to expect using my method: Black 2pt line is most likely path from here (dashed 1pt black line is alternative) - i.e. bounce to low 30ks (point target 31616.3) to test recent channel {the decision at low 30ks will differentiate which path is taken}: - If rejected in low 30ks, which is higher probability, expect more downside to around 12-17k (point target 14278). This should mark the end of the corrective wave. From there my initial target to spark a rally is 41k by October 2022 - If continues after testing low 30ks, flip the expectation above (i.e. 41k first near term, then drop to ~14278k to complete the correction by October) *Max downside risk I see is 6396, but notice I included 0 in this analysis chart (that's right, don't plan on it but don't count it out either hah) **Upside point target, longer term, is 84799. This probably wouldn't be realized until 2023? We're not there yet but I'll update once I see which (if either) of these 2 paths play out... 2 roads diverged in a yellow wood, and BTC did what it wanted to ("BTC stay on the path"... "No way I'm not scared of the SPYDER, I control the SPYDER"). The images posted in the chart are interesting. Not going to go into details but as I mentioned above I essentially use average daily price w.r.t. control charts to obtain estimated ranges. The trajectories are generally pretty stochastic/random, but sometimes interesting patterns unfold at the end of price cycles that give insight into breakouts and breakdowns.. for BTC, back in July 2021 an Expanding Triangle emerged on the proportional range chart and then it took off to 60k. Currently, as of this morning, an Expanding Triangle just completed on BTCs proportional range chart... just something to think about, that's all I am saying. I am not saying it will breakout today because of this lol... but the setup for such a breakout is in the works (i.e. corrective cycle nearing the end). Best to All
GEMINI:BTCUSD
by JerryManders
6
Consolidation between Supply and DemandAt the point A, the imbalance happened from the base (equilibrium). The price shot high quickly to the point B. After that the price retrace to the point C. The price rose again and broke the swing high of the B. and make the higher high. After that the price got down and broke the low of C. The price dropped slower than the rally of A. So the projection of the drop is to the point of D where the demand zone lies. After that, the price will rise (at least) to the level of B creating pattern Quasimodo. For your information, Quasiomodo is like head and shoulders but with an additional requirement of left shoulder. The left shoulder should get down and break the low of the right shoulder.
by albusthami