Truth About Trends

8/2/2019 Truth About Trends

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The Truth

About the TREND

Market Flow Analysis Method

(MFAM)


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The Core Price Structure and Rhythm of ALL Markets!To Successfully Trade the Markets

You need to understand the Underlying Movements and Rhythm of the Markets!

The following Principles form the Cornerstone of a Consistent and Successful

Trading Methodology. There is only one major Market Cycle (or movement) inexistence. The Market can do nothing else but comply with this one basic Market

Cycle, we call it

The Market Flow Analysis Method (Pure PRICE ACTION)

There is no other Movement or Motion possible in the Markets.

The Markets do NOT move in a Random fashion.

The MarketsALWAYS move within the framework of an Underlying Market

Wave. Otherwise, known as a TREND, whether it be Up, Down, or Sideways.


(MFAM)


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Three Primary Waves (TRENDS) in the Markets!

There are only Three (3) Primary Waves (TRENDS) in the Markets:

1) UP TrendA Series of Higher Highs and Higher Lows

2) DOWN TrendA Series of Lower Highs and Lower Lows

3) SIDEWAYS TrendA Series of relatively Equal Highs and Equal Lows

Identifying which Wave or TREND the Market is in is vital to Successful Trading.

The Market Flow Analysis Method (MFAM) is based upon: the Upside Penetration of market HIGHS, and

the Downside Penetration of market LOWS.

New Highs and New Lows are continuously being formed in the Markets. Therefore, Traders

must identify these important levels to help in mapping out what the Markets are most likely

going to do next.

This will help you in identifying if a market is TRENDING UP, TRENDING DOWN, or

TRENDING SIDEWAYS, at the Early Stagesof the Trend and not after the fact.


(MFAM)


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Starting the Market Flow Analysis Method ProcessIn Trading the E-Mini S&P 500 Market, once the Market moves in either direction off of the Open and

establishes a High and Low with a sufficient range between them, then an Initial Swing has been

established. Once the Market makes a move off of either the High or Low and proceeds to Penetrate Up

through the High or Down through Low of the Initial Swing, a new TREND (potentially) begins in the

direction of the penetration.


(MFAM)

HIGH

LOW

HIGH

LOW

The Penetration UP through theHIGH of the INITIAL SWING indicates

the beginning of a new Up Trend

The Penetration DOWN through theLOW of the INITIAL SWING indicatesthe beginning of a new Down Trend


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The UP Trend Market Flow Process

A series of New Highs (NHs) and Active Lows (ALs)


(MFAM)

LL(Lowest LOW)

AL(Active Low)

AL

AL

MRAL(Most Recent Active Low)

HIGH

NH

NH

NH

PL

PL

PL

PL

LOW


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The DOWN Trend Market Flow Process

A series of New Lows (NLs) and Active Highs (AHs)


(MFAM)

HIGH

NL

NL

LOW MRAH

AH

AH

AH

NL

(Most Recent Active High)

PH

PH

PH

PH


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The SIDEWAYS Market

A series of relatively Equal Highs and Equal Lows


(MFAM)

HIGH

LOW


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AL

An UP Trend Reversing Into A DOWN Trend

Downside Penetration of the Most Recent Active Low (MRAL) in the MFAM


(MFAM)

AL

MRAL

NH

NH

HHAH

(Most Recent Active Low)

Simply being able to identify critical Lows in an UPTREND will enable you to stay

in a Trend longer and you will know with High Probability at what levels the Market

is most likely going to change directions.

NL

The UP Trend is potentially Reversing into aDOWN Trend at the Downside Penetration of the MRAL

PL

PH

NH

AL

PL


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NL

A DOWN Trend Reversing Into An UP Trend

Upside Penetration of the Most Recent Active High (MRAH) in the MFAM


(MFAM)

NL

MRAH

AH

AHNH

LL

(Most Recent Active High)

Simply being able to identify critical Highs in a DOWNTREND will enable you to

stay in a Trend longer and you will know with High Probability at what levels the

Market is most likely going to change directions.

AL

The DOWN Trend is potentially Reversing into an UPTrend at the Upside Penetration of the MRAH

PH

PL

AH

NL

PH


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Truth About Trends