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Market Analysis
Monday October 23, 2017
Market Analysis Print

The key element to market analysis is the use of bar charts; swing lines to identify specific trends suitable for position trading; price projection for a calculated future price objective and seasonal patterns for the time frame to enter and exit a spread.

We have selected and monitor only calendar spreads that exhibit reliable symmetry based on a specific blend of bar chart analysis, swing lines, price projection and a seasonal time frame when available. We evaluate over 40 futures pairs across the following 18 markets: Live Cattle, Lean Hogs, Corn, Wheat, Soybeans, Soy Meal, Soy Oil, Eurodollar, 90 Day Bank Bills, Unleaded Gas, Heating Oil, Crude Oil, Natural Gas, Cotton, Cocoa, Coffee, Sugar and Copper.

Virtually all spread charts are presented using a line chart - bar charts are used for the finer and more accurate detail they provide. By using bar chart analysis we can identify the three types of trend patterns: reversal, continuation and consolidation. Bar charts allow for the benefit of accurate trend identification using swing lines.

We use swing lines in order to view the overall and preferred trend of a market suitable for position trading. These swing lines identify our preferred longer-term trends by removing market ‘noise’. Markets are evaluated in weekly, daily and intra-day time frames to show direction and speed of price. See the Eurodollar chart below.

We use basic bar chart analysis to identify these simple but recognizable patterns such as double tops and bottoms, reversals, continuation patterns and consolidation. By viewing the chart below of June 11 / June 12 Eurodollar spread you can see that a reversal occurred at the swing low of 24. This was our trigger to enter the trade with a narrow amount of risk and a stop. We now try to create an expectation of where price might be going by using a price projection method unique to Just Spreads.

Projected price objectives are identified using a simple calculation based on our swing line highs and lows. Again, by looking at the Eurodollar spread below, if we subtract the price of the swing low 24 from the price of the swing high 42 we have 18. By adding this (18) to our swing high of 42 we can approximate or project a price objective of 60.

We use seasonal patterns or tendencies to create a further edge. Seasonal patterns are predictable recurring market tendencies and provide some of the best possible opportunities due to their high degree of reliability over many years. We select seasonal spread patterns that have a high probability of working but it must correlate with the other key trading elements before a manageable trade opportunity can be identified and acted upon. We never rely solely on a seasonal entry and exit date as our only basis for taking a trade. By applying a regiment of simple but effective trading tools we can improve on a seasonal time frame.

See the video tutorial 

Advanced Concepts to Spread Trading PDF

trading grafik


Finding professional assistance that will improve your decision making is vital. They should provide general market and exchange information and order assistance.

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