PriceMap Qualifiers CriticalRange

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CriticalRange

The PriceMap defines the structure of the market state by identifying the key price band or CriticalRange for the trade period. The Upside Pivot [UP] and Downside Pivot [DP] directional levels encapsulate the CriticalRange which will behave like key resistance and support levels,  defining the behavioral area of indecision or neutral zone for the trade period. 

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The CriticalRange is broken up into 6 quadrants, defined by a directional level mid point and minor levels on either side of the UP and DP. This structure and the inherent meaning of each level are key to interpreting market “tells” in real-time.

DIRECTIONAL

The DIR (Directional) is the mid-point of the Critical Range but is not necessarily symmetrical. The DIR acts as a classic pivot point for the trading session that the market will rotate around to find its immediate bias within the CriticalRange.

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A held trade above the DIR gives the market a positive lean and below negative, targeting the UP and DP CriticalRange extremes. Trading within the CriticalRange represents a neutral posture for the market. A breakout of the CriticalRange signals a directional bias and possible trend move for the session.

 CR + and CR –

The CR+ and CR – define the interior quadrants of the CriticalRange. These minor levels will come into play as the market rotates around the DIR, either tightening the coil of a digestive trade or preparing for a transitional BREAKOUT.

  • Classic rotational trading within the CR+ and CR- range is typical for NON TREND type consolidation prior to a move. A market that has tested both the CR+ and CR- and has maintained the integrity of each, is a “tell” that a sideways trade will persist producing a NON EVENT session.

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  • A breach of the CR+ or CR- after a rotational trade around the DIR will give the market a bias targeting the CriticalRange parameters (UP/DP). If the signal is valid and “ready to go”, price action will maintain structure at the DIR after a CR+ or CR- breach. If it does not, it is a sign of digestion or potential reversal.

CRX + and CRX –

The CRX +/- are the Critical Range Breakout extremes. These are the price points that must be taken out to confirm a structural break or “Breakout” and can result in good exhaustive extremes.

  • Exhaustive Extreme – The CRX+ and CRX – identify the CriticalRange thresholds and represent an exhaustive extreme for any false CriticalRange BREAKOUT. If the integrity of the CRX + or CRX – remain intact any BREAKOUT signal must remain suspect. These levels can be used as stop levels for any FADE or REVERSAL strategy at the UP or DP as they are the “squeeze” high or low for any momentum exhaustion.

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  • Structure Break – The CRX+ and CRX – identify the confirmation points that must be violated to confirm a BREAKOUT. Once the CRX + or CRX – has been violated the market should maintain that bias above or below the respective CR + or CR-. The best BREAKOUT scenarios have the market hold structure above the UP or below the DP and just “go” with only one shot, if any, after a CRX +/- violation. Trading back inside the CriticalRange to the CR + or CR – will take some of the energy away from the BREAKOUT signal and is a “tell” for more of a “stop and go” trend condition.

PRACTICAL APPLICATION

* Use the price action within the CriticalRange to provide insight to the markets next move.

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* Use the CR +/- and the CRX +/- to confirm or deny a trend move.es-nt2-11-5-2015-5-08-34-pm

* Note tactic signals at these minor levels for position management of STRATEGY themes.

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PriceMap Qualifiers R LEVEL Positions

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The PriceMap is the framework of the market STATE and the R LEVEL defines the behavioral sentiment bias for the trade period. Where the R level is on the PriceMap will skew the condition of the market state. The R LEVEL is a floater number which can be in one of 9 PriceMap positions each with its own identity that is outlined below.

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R LEVEL Positions

R =DIR – The R LEVEL equal to the DIR (Directional) is in a classic pivot point position, as sentiment is balance and “on the fence”. The market is indecisive or is preparing to make a move. Any Market State with the R=DIR should respect the pivotal nature of sentiment. Typically when the R LEVEL is in this position it will either just breakout and “go” producing a linear move or a difficult rotational trade will consume the market for the trade period.

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R =UP – The R LEVEL at the top of the CriticalRange defines a “hard” resistance point at the UP (UpsidePivot). Energy is centered at this price point and a violation should be expected to produce sharp interest. A downside failure below the DP (DownsidePivot) however should be expected to NOT have the same energy and any downside breakout to be more measured.

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R >UP – The R LEVL above the UP but less than the UT1 creates a RESISTANCE BAND with the UP. Trading tactics should focus on the entire zone for signal acceptance. Typically this would be on the sell side as this is a resistance band but will transition into a support band if the market violates the R LEVEL and starts to transition higher.

R =UT1 – The R LEVEL = to the UT1 (Upside Target #1) creates an even wider resistance band with the UP. Signal acceptance anywhere in the price band is acceptable however it is best to commit to opportunities closer to the UP or UT1. As the R LEVEL moves farther above the DIR the energy in the market place is skewed higher. Any lower price movement should be expected to be more measured and any positive turn from lower levels should be expected to target the R LEVEL

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Same Images for R>UP and R=UT1

R >UT1 – The R LEVEL above the UT1 identifies the high point for any price squeeze against the underlying trend if it is going to resume in the session. A market in this position has a defined underlying negative tone and any sell signal, especially at higher levels, below this price points are actionable. Sells below the DP are a lower value opportunity and the threat of a corrective squeeze up to the R LEVEL is real. Typically the market will attempt some type of corrective move when the R LEVEL is in this position.

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R =DP – The R LEVEL at the bottom of the CriticalRange defines a “hard” support level at the DP (DownsidePivot). Energy is centered at this price level and a failure should be expected to produce aggressive offers. An upside breakout above the UP (UpsidePivot) however should be expected to NOT have the same energy and any upside breakout to be more measured.

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R < DP – The R LEVEL below the DP but greater than the DT1 creates a SUPPORT BAND with the DP. Trading tactics should focus on the entire zone for signal acceptance. Typically this would be on the buy side as this is a support band but will transition into a resistance band if the market violates the R LEVEL and starts to transition lower.

R =DT1 – The R LEVEL = to the DT1 (Downside Target #1) creates an even wider support band with the DP. Signal acceptance anywhere in the price band is acceptable however it is best to commit to opportunities closer to the DP or DT1. As the R LEVEL moves farther below the DIR the energy in the market place is skewed lower. Any higher price movement should be expected to be move measure and any negative turn from higher levels should be expected to target the R LEVEL.

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Same Images for R<DP and R=DT1

R < DT1 – The R LEVEL below the DT1 identifies the low point for any price squeeze against the underlying trend if it is going to resume in the session. A market in this position has a defined underlying positive tone and any buy signal, especially at lower levels, above this price points are actionable. Buys above the UP are a lower value opportunity and the threat of a corrective squeeze down to the R LEVEL is real. Typically the market will attempt some type of corrective move when the R LEVEL is in this position.

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PRACTICAL APPLICATION

* The R Level position itself can be a condition on its own to align trading tactics. For example any time, in any market state that the R=DIR it is a sign that the market is in a “pivotal” position, as sentiment is balanced. Trading tactics that perform well in pivotal market states can search out all markets that have an R=DIR.

* The R Level significantly above R>UT1 and R=UT1 or significantly below R is a “tell” that a corrective trade may develop targeting the R LEVEL. Identifying a break in PriceMap STRUCTURE is typically the 1st signal that a corrective move is in play.

* Always note the differential between the last traded price an the R Level as this is the price point that defines the rik for any trade.

PriceMap QUICK START

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PRACTICAL APPLICATION

The PriceMap provides traders with the ability to anticipate opportunity at key structure points and create risk defined strategies with improved trade vision of expected price movement. The method is scalable as a unified approach across all markets and asset classes.

 

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SIGNAL ACCEPTANCE – Focus trading and signal acceptance at PriceMap level structure points. Avoid trading “in the middle”.

SIZE MANAGEMENT – Value trade opportunities and position sizing based on the PriceMap qualifier weighting. As a rule of thumb the R LEVEL should carry the greatest value or position size followed by the CRITICAL RANGE extremes (UP and DP). The DIR “Directional” (+++ +++) and *** 3 star PriceMap level target next followed by the ** 2 and * 1 star PriceMap levels. The +c and -c are major “target” levels but should be integrated as a directional pivot for insight to market momentum in the next session.

TRADE OPPORTUNITIES – Use the PriceMap as a “ladder” for trade management. Think in terms of price segment trade vision with opportunities defined as 1/2, full and X2 APMD (Average Price Map Distance) profit targets.

POSITION MANAGEMENT – Use the PriceMap as a “ladder” for position management. Markets make trend moves by holding positive or negative structure. Use price action within the PriceMap as a position management tool, adjusting stops as the market breaches a PriceMap level anticipating that it will go to the next level by holding above/below the breached level. If the breached level cannot sustained the violation it is a “tell” that the market may be set to REVERSE for a test of the opposing level on the PriceMap.

PriceMap Definitions

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JSServices PriceMap Analytics use quantitative methods to objectively define the price STRUCTURE of the market STATE. The knowledge of the market STATE STRUCTURE and the awareness of current price action within it, provides clarity to the value of an opportunity and the risk and reward associated with it.

 

PriceMapLevelDefinitions_V13

OVERVIEW

Price levels in the PriceMap series followed by stars *** are minor structure and major target “support and resistance” levels. The star *** value weights are determined by their structural significance to the market state alignment. Alignment defined as the price point that will have an influence on the market maintaining structure or not. The more stars ***, the more value a level has and the greater significance to the structural integrity of the price framework of the market STATE. Prices followed by symbols (+++ +++ (DIR), UP, DP, R, +c and – c) are directional pivots or trend indicators. These levels are the actionable points of the PriceMap, as they define where potential transitional shifts in STATE will occur and are the preferred entry levels.

In a general sense trading within the CRITICAL RANGE (UP–DP) represents a neutral posture for the market and trading outside a trend posture with the DIRECTIONAL (+++ +++ the classic pivot point within this range. The ***# levels are Upside/ Downside Target (UT/DT) projections the for a CRITICAL RANGE breakout.

The R Level qualifier represents the sentiment bias for the trade period. Trading above the R signals a positive buy break bias, while trading below signifies a negative sell rally bias. A price violation or failure at the R Level would reverse this bias.

+c and – c symbols represent Continuation Momentum numbers that define the technical event extremes.

JS PRICEMAP QUALIFIER KEY

R = REVERSAL LEVEL is the SENTIMENT BIAS level for the trade period, positive bias above, negative below.

UP = UPSIDE PIVOT is a key resistance point for the trade period and the top of the CRITICAL RANGE

DP = DOWNSIDE PIVOT is a key support point for the trade period and the bottom of the CRITICAL RANGE

 

MAJOR LEVELS

 DIR (+++ +++) DIRECTIONAL is a classic pivot point that sets the bias for trading within the CRITICAL RANGE [CR]

UT1 (***1) UPSIDE TARGET #1 is the minimum target for a CR BREAKOUT

UT2 (***2) UPSIDE TARGET #2 is the expected target for a CR BREAKOUT

UT3 (***3) UPSIDE TARGET #3 is the best case objective for a CR BREAKOUT

UT4 (***4) UPSIDE TARGET #4 is an event extreme target

+c     +CONTINUATION MOMENTUM defines the technical extreme

DT1 (***1) DOWNSIDE TARGET #1 is the minimum target for a CR BREAKOUT

DT2 (***2) DOWNSIDE TARGET #2 is the expected target for a CR BREAKOUT

DT3 (***3) DOWNSIDE TARGET #3 is the best case objective for a CR BREAKOUT

DT4 (***4) DOWNSIDE TARGET #4 is an event extreme target

-c      -CONTINUATION MOMENTUM defines the technical extreme

MINOR LEVELS

 *       MINOR 1 STAR LEVEL represent a minor support or resistance level

**     MINOR 2 STAR LEVEL represent a good minor support or resistance level

CRX+ CRITICAL RANGE EXTREME + defines the CRITICAL RANGE positive extreme

CR+  CRITICAL RANGE + defines the interior +quadrant of the CRITICAL RANGE

CR-   CRITICAL RANGE – defines the interior -quadrant of the CRITICAL RANGE

CRX- CRITICAL RANGE EXTREME – defines the CRITICAL RANGE negative extreme

 

MARKET METRICS

 VAR = VARIANCE – defines the optimal area influence of a Major or Minor Level

AD = ALERT DISTANCE – defines the area of signal acceptance and structure thresholds for a Major Level

MSD = MAXIMUM STOP DISTANCE – Defines the maximum area of influence of a Major Level

 

Jigsaw Trading Integration

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August 19 2016

Jigsaw launches JSServices Analytics integration in their Depth and Sales settings and Aution Vista Heatmap including the full PriceMap Framework and MarketMetrics.

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Sierra Charts Integration

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May 6 2016

JSServices in conjunction with Trade29 launches Sierra Charts integration of JSServices full PriceMap Framework and MarketMetrics as a 3rd party custom chart study.

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MCV Relative Strength

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RELATIVE STRENGTH

The MC VALUE is a single number in a bounded scale. This feature provides a quick “relative strength” comparison to other like markets for spread or paired opportunities.

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Every market has an MCV and that value is bounded in the MCV Table scale. The MCV technical rank allows a trader to quickly identify the markets that are technically bid or offered in a sector and select strategies that will work best for each market individually, by default creating a technically paired opportunity.

  • Note: the MCV is not a “signal” and does not indicate a spread should be initiated that establishes a long position in a positive MCV market and short in a negative MCV market. It can however be used to accept sell signals in the markets of a sector that have weaker MCV and buy signals in markets with a stronger MCV.

 

 

MCV Size Management

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SIZE MANAGEMENT

The MCV can be used for size management to gauge the amount of leverage used for a signal.

For example assuming all System or Fundamental strategy signals are accepted, size can be increased or decreased depending on the system signals confluence with the MCV.

MCV SZS

MCV SZB

The one thing we know for sure about the markets is that we don’t know what they are going to do. By accepting all signals but using the MCV as a size management tool, your strategies can naturally leverage up when they are aligned with the MCV.

For discretionary traders when your market bias is in line with the MCV you can step out a little more and when it is not in alignment, step back and trade more conservatively with smaller size.

MCV DIS

The edge discretionary trading has over machine signals is the “gut” feel to anticipate an opportunity. The MCV can be used as a “reality check” to keep your leverage and risk in line with the probabilities and not what you “think” “should” happen.

 

MCV Strategy Selection

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STRATEGY SELECTION

The MCV is an objective Technical Indicator, which can be used as a criteria filter for confluence with a fundamental position, a technical system signal or discretionary market bias.

For example, in its most basic form a SELL SIGNAL would only be accepted when the MCV is negative and a BUY SIGNAL only when the MCV is positive.

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This does not mean that negative system or fundamental signal will not “work” when the markets technical state or MCV is in a positive position, it just means that the chances are lower that it will and the follow through potential of the signal is decreased.

For a discretionary trader, if you have a positive outlook on the market but the MCV is negative you should be more conservative and selective in your trades and avoid “pressing” the long side with the understanding that today the MCV bias is against you and if you have profits from any longs you should take them.

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Note: Markets are dynamic and are shifting from one technical state to the next. By keeping signal acceptance in line with the MCV the chance of success is improved. This does not mean that signals counter to this bias cannot be profitable and no doubt most major “reversal” signals are “counter” to the current technical state, however they do occur less frequently.

MCS Explanation

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MARKETCOLOR STATE (MCS)

The MC VALUE (MCV) is a bounded scale study which has a finite set of MC VALUE CHANGE (MCC) permutations, each result representing a defined technical “signature” state whose characteristics, expectations and attributes can be qualified. There are 26 unique signature trade states that define the MarketColor State [MCS].

MCB TABLE

OVERVIEW

The MCS provides an objective definition of a markets technical state. By understanding MARKET STATE traders are able to align trading tactics to the expectation of the state conditions.  It is important to understand that markets are constantly in transition from one state to the next. The MCS identifies what the current state is and the “tells” to look for that signal the market state is going to persist or not.

  • When the market performs to the expectation of the state, trading seems easier as opportunities align with the characteristics of the state and can be anticipated. When the market is not performing to the characteristics of the state, it is in transition and trading opportunity is more difficult to predict. The key is to recognize as early as possible the markets intentions of what it wants to do. The reason its easy to look back at the end of the day and explain “why” the market did what it did in the session, is that the market leaves “tells” to its intentions in its price action. By understanding the market state and knowing what the market “should” do you are able to recognize these tells in real time and not in hindsight, dramatically improving your intuitive decision making. The MCS is the foundation of this knowledge base and is divided into 3 section: Characteristics, Expectations and Attributes

MCS – CHARACTERISTICS

MCS Characteristics highlight the specific FACTS of the market state. It is the textbook definition of what the market “should” do if it performs to expectation of the  state including the “tells” to look for to confirm or deny this expectation and contingencies to apply when the markets transition. Traders should align their tactics with these facts.  

 

The MCS icon provides key information about the state at a glance, its TREND TYPE, #TAG and tag DESCRIPTION

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  • TREND TYPE – This item represents the general market state type or primary state. These are the generally defined states:  NON TREND | TREND |EXTREME
  • MCB #TAG and DESCRIPTION – define the signature market state which is a subset of the general TREND TYPE.

NEU is a general NON TREND market state type with no signature. The state is defined by and MCV in the 3 to +3 range and an MCC that is less than an absolute 3 shift.

NPT is a general TREND type market state that has an MCV in the -3 to +3 NEUTRAL range but does have an MCC that is = or greater +3 identifying a positive transition signature in the MCV NEUTRAL ZONE.   

Example

  MCB NPT

The TREND TYPE and SIGNATURE state characteristics allow traders to align tactics across general type or dial into the specific nuances of a signature state.  

MCS – EXPECTATIONS

The MCS EXPECTATION provides a textbook graphic of the expected price action of the defined Market State. It is important to understand the complete picture so expectations can be aligned. An expectation of a NPT-Neutral Positive Transition MCS is that it will trend higher as this is the characteristic of the state. IF the market is not trending THEN it is a “tell” the market is transitioning back into a NON TREND condition. Knowing these facts improves awareness to align tactics and anticipate opportunity.

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MCS – ATTRIBUTES

The MARKET STATE ATTRIBUTE icons define specific nuances of the current Market State in regards to MOMENTUM, DIRECTIONAL BIAS, VOLATILITY expectation and TREND TYPE. Traders can use these as an easy classification tool to align tactics with the attributes of the state.

MOMENTUM

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This is a MOMENTUM icon denotes the markets ability to trend and is the preferred attribute for all trading tactics that like to trade with momentum.

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This icon identifies a market with NO MOMENTUM and is the preferred attribute for non trend tactics which like to fade momentum.

DIRECTIONAL BIAS

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This icon identifies a market with a POSITIVE BIAS and is the preferred attribute for BUY SIGNALS

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This icon identifies a market with a NEGATIVE BIAS and is the preferred attribute for SELL SIGNALS

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This icon identifies a market with a NO BIAS and is the preferred attribute for both BUY and SELL SIGNALS and transitional or rotational trading strategies

VOLATILITY

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This icon identifies a market with a VOLATILITY INCREASE expectation and is the preferred attribute for TREND FOLLOWING momentum strategies.

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This icon identifies a market with a VOLATILITY DECREASE expectation and is the preferred attribute for NON TREND FADE momentum strategies.

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This icon identifies a market with a MIXED VOLATILITY expectations and is the preferred attribute for ROTATIONAL and TRANSITIONAL BREAKOUT momentum strategies.

TREND TYPE

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This icon identifies a market in a POSITIVE TREND and is the preferred attribute for BUY BREAKOUT TREND FOLLOWING strategies

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This icon identifies a market in a NEGATIVE TREND and is the preferred attribute for SELL BREAKOUT TREND FOLLOWING strategies

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This icon identifies a market in a NON TREND position and is the preferred attribute for DEVIATION and FADE strategies

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This icon identifies a market in a EXTREME POSITIVE position and is the preferred attribute for SELL REVERSAL strategies

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This icon identifies a market in a EXTREME NEGATIVE position and is the preferred attribute for BUY REVERSAL strategies