Understanding Market Types in Drummond GeometryThe 5 Market Types:
1️⃣ Congestion Entrance – The market slows down after a trend and starts moving sideways.
2️⃣ Congestion Action – Prices oscillate within a range, with no clear trend direction.
3️⃣ Congestion Exit – The market breaks out of congestion, starting a new trend.
4️⃣ Trending – Prices move in a clear direction, either up or down.
5️⃣ Trend Reversal – A trend suddenly shifts in the opposite direction.
🔥 The 3 Close Rule for Trends
A trend is defined when the PL Dot (a short-term moving average) remains on one side of the close for three consecutive bars. If this happens, the market is in a trend until congestion begins.
📌 Congestion Entrance: The First Sign of a Trend Change
A congestion entrance occurs when the PL Dot switches sides relative to the close. This signals that the market is entering a sideways phase. Until the next trend establishes itself, the market will stay in congestion.
🔹 How to spot it?
If a trend slows down and price closes on the opposite side of the PL Dot, it is the first bar of congestion.
The market remains in congestion until a new 3-close trend forms.
📌 Congestion Action: The Market Moves Sideways
During congestion action, prices move back and forth between support and resistance without breaking out. The PL Dot is often flat, and traders look for signals of continuation or breakout.
🔹 How to trade it?
Identify strong support & resistance levels.
Trade within the range (buy low, sell high).
Watch for signs of congestion exit (breakout).
📌 Congestion Exit: The Breakout Phase 🚀
A congestion exit happens when the market leaves congestion and starts a new trend. This is one of the most profitable trading opportunities.
🔹 How to spot it?
Price breaks above resistance or below support.
The PL Dot starts moving in a clear direction.
The market closes outside the congestion range.
🔹 How to trade it?
Enter after a confirmed breakout.
Use PL Dot & support levels to manage risk.
Pyramid your position if the trend continues strongly.
📌 Trending Market: The Sweet Spot for Traders 📈
Once the market has exited congestion, it enters a trend. This is when traders can ride momentum and maximize gains.
🔹 How to trade a trend?
Enter early & stay in as long as PL Dot supports the move.
Pyramid your position for bigger profits.
Monitor resistance & support to determine exits.
📌 Trend Reversal: Spotting the Shift in Direction 🔄
A trend reversal happens when the market suddenly changes direction. This is confirmed when three consecutive closes appear on the opposite side of the PL Dot.
🔹 How to spot it?
PL Dot pulls back into the range.
Resistance/support levels start breaking.
A major higher timeframe resistance level is hit.
🔹 How to trade it?
Exit your position before the reversal is confirmed.
Look for a new congestion entrance or a trend change signal.
If reversal is confirmed, trade in the new trend direction.
🎯 Key Takeaways for Drummond Traders:
✔️ Know the 5 market types. Each phase requires a different strategy.
✔️ The PL Dot is key. It signals trend strength and potential reversals.
✔️ Congestion action = patience. Wait for clear breakouts before entering trades.
✔️ Ride the trend. The best profits come from early identification of trends.
✔️ Monitor resistance & support. This helps determine potential reversals.
🚀 Master these market types, and you’ll be able to trade with more confidence, better timing, and higher accuracy.
📌 Do you use Drummond Geometry in your trading? Drop a comment below! 👇
