This Wiki is devoted to discussing trends within trends including Analysis of a Macro Stage 2 Uptrend, Analysis of a Macro Stage 4 Downtrend, and Analysis of a Macro Stage 1 and 3 Sideways Trends.
This Wiki is part of the larger Price Action Analysis Wiki. You can access the Price Action Analysis Wiki HERE.
This Wiki is also a part of our Essential Forex Trading Guide. Be sure to check that out HERE.
Macro Trend Analysis
Now that you have learned all about the Basic Cycle and the 3 trends it is important that you understand that there are always trends within trends. That’s right, trends within trends. If you are using different timeframes, understanding the difference between macro trend and micro trend analysis is essential for timing your trade entries and exits.
These micro trends within macro trends are broken up into the 4 stages just the same as with macro trends . This section of this Wiki is devoted to discussing trends within trends and it will become clear by the time you are finished with this section. This is a very exciting section that will unlock many mysteries about the market's movements.
Analysis of a Macro Stage 2 Uptrend
A macro uptrend is made up of a series of repetitive micro cycles. While higher highs and higher lows signify that the market is in a macro stage 2 uptrend, you will notice that the macro stage 2 has micro stages 1, 2, 3 and 4 as well (see figure 6.1).
Figure 6.1: Macro Stage 2 with Micro Stages 1, 2, 3 and 4.
In a macro stage 2 uptrend, traders should look to buy dips/pullbacks and breakouts. The question is not if to buy but when to buy the dip/pullback or breakout. The answer is to buy whenever there is a micro stage to macro stage match!
Traders should be looking to buy when the micro trend is in sync with the macro trend. This is a profound concept and a significant key to profitable trading success on the buy side. A buy will be triggered whenever there is a macro stage 2 with a micro stage 2 match!
- Macro Stage 2 with a Micro Stage 3.....Not yet
- Macro Stage 2 with a Micro Stage 4.....Hold on
- Macro Stage 2 with a Micro Stage 1.....Get ready
- Macro Stage 2 with a Micro Stage 2.....Buy Buy Buy!
Analysis of a Macro Stage 4 Downtrend
A macro stage 4 downtrend is made up of a series of repetitive micro cycles. While lower highs and lower lows signify that the market is in a macro stage 4, you will notice that the macro stage 4 has micro stages 1, 2, 3 and 4 as well (see figure 6.2).
Figure 6.2: Macro Stage 4 with Micro Stages 1, 2, 3 and 4.
In a stage 4 downtrend traders should look to sell short rallies or breakdowns. The question is not if to sell/short but when to sell/short the rally or breakdown. The answer is to sell short whenever there is a micro stage to macro stage match!
Traders should be looking to sell short when the micro trend is in sync with the macro trend. This is a profound concept and a significant key to trading success on the short side. A short will be triggered whenever there is a macro stage 4 to micro stage 4 match!
- Macro Stage 4 with a Micro Stage 1.....Not yet
- Macro Stage 4 with a Micro Stage 2.....Hold on
- Macro Stage 4 with a Micro Stage 3.....Get ready
- Macro Stage 4 with a Micro Stage 4.....Sell Sell Sell!
Analysis of a Macro stage 1 and 3 Sideways Trend
A macro stage 1 or 3 sideways trends are made up of a series of repetitive micro cycles. While relatively equal highs and lows signify that the market is in a macro stage 1 or 3, you will notice that the macro stage 1 or 3 has micro stages 1, 2, 3 and for (see figure 6.3).
Figure 6.3: Macro Stages 1 or 3 with Micro Stages 1, 2, 3 and 4.
In Stages 1 and 3 traders should be looking to buy the dips and sell the rallies. Always be alert to the fact that all sideways ranges will eventually breakout or breakdown. Traders who master making profits in these stages are well on their way to a very successful career in the markets.
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