Market Example JS Services views the market as a staircase trading in levels and price bands. When the upside pivot (UP) or downside pivot (DP) is violated the extent of the move is determined by how many successive levels the market sustains. Referring to system example (Table A), a rally up to 131030***1 target would be expected after a violation of the 130000 UP. This move is dependent on the market holding above 130000. The up trend will continue as long as the market sustains trading above each successive level that it violates, with 135400***4 the upside objective for the trading session.

The levels are precise, +/- 4 tics to determine a level failure. These parameters are a little wider for markets like the S&P 500 and less for markets like the Eurodollars. For example a long position from 130200 with the market at 132800 would have a profit stop at 132350 (+\-4 tics from the 132450***2 (#2 target). This is an aggressive risk management adjustment. A more conservative, longer-term out look, would be to put a stop below 131750 * or the next level on the Price Map. If the market cannot sustain trading above the 132450***2 level, a failure down to 131750* or 131030***1 support levels would be expected. A trader’s individual risk tolerance and market velocity will determine the stop placement that complements his/her personal trading style. Position initiation can be used in this way also. Gap openings against the Reversal number or Minor trend provide good opportunities for this type entry. In the example the minor (MIN) trend is UP above the 128150 level. A gap opening down to this level would provide a quick buying opportunity expecting a bounce back to at least the 129000 DP. Trend changes are powerful momentum levels in the market and provide excellent areas for position initiation. An important note: a trend change is only confirmed on a closing price above the trend change level, whereas an R reversal number violation or failure can shift intra-day. The Price Map is dynamic and can be incorporated into any trading style or system providing trading opportunities for different risk tolerances and time horizons.

Spike Numbers A common occurrence in the market is a false violation of a major pivot. For example, the market violates the DP and breaks hard down to a minor support level (a no star or 1 * star number), then immediately following the low print rallies back above the DP. This is commonly referred to as a spike. Price aberrations such as these are common with intra-day price volatility. Referring to the Price Map example, the market is trading at 129500 and begins to break down and test the 129000 DP. After a few tests of 129000 the market fails and breaks violently down to 128750*. Immediately after a 128750 print the market bounces back to test 129000. The market trades at this level for a few minutes and then starts to edge higher above 129000. This is a BUY signal with high reliability. The market should be bought off the 129000 DP with an expectation of a rally up to at least the UP at 130000.

Range Days Continuing with our example, the market trades above 129000 and rallies up to 130000 and then 130400. The markets excitement cannot sustain the rally and is soon trading back within the Critical Range and below the 130000 UP. The market has spiked through the UP and DP creating two false breakouts. This is a consolidation signal with high reliability indicating that the market will go sideways for the remainder of the trading session and should be traded as a range day fading all rallies and breaks.

Counter Trend Moves A pivot breakout against a trend can be similar to a spike. Referring to the Price Map example. A rally above the 130000 UP has the market is in a corrective position with the R at 131030***1 R. The market starts to move higher pressing 130400**; this rally should be viewed as a short-term selling opportunity up to 131030***1 R. Only a held violation of 131030 would negate and reverse this position. A reversal here would have dual importance as this would shift the intra-day trend in line with the Minor trend adding to the strength of the signal. A breach of the 131030***1 R target reversal number would switch the intra-day bias to positive which is the same as the Minor trend (MIN UP 128150). Signals with the trend will show greater follow through potential.

Gap Openings Assuming a 129500 close and a gap higher opening at 131200. The market has opened up above the #1 target and should be bought off the 131030***1 R. 132450***2 is the initial resistance target. The market has gapped in the direction of the Minor trend and has turned the intra-day trend positive as well. This signals puts the market in a strong positive position with 132450***2 the minimum target. Major directional resistance rests at 133700***3 +c. This is major directional resistance because it is a ***3 target and the +c. Longs initiated on the 761200 gap opening should use this as the profit target for risk management parameters placing a stop below 130400**. 130400 is one Price Map level below the 131030***1 R reversal number. (If the market is going to extend higher in the session it should not do much if any trading below the reversal number in this example). Directional. Re-cap: bought 131200 with a stop at 130400 and a target of 133700 (risk 800pts/reward 2500pts, or a 1-to-3 risk reward ratio). When the markets trends are in sync it is wise to "give the position some room". This is advisable to filter out any random "noise" or price spike. On any gap opening it should be noted that the market likes to fill in overnight price gaps and will usually at least make an attempt to fill it.

Significant Gap Openings A significant gap opening up or down would be a gap opening above or below the #1 initial objective. After the significant gap opening the market has set the bias for the period and the trader should note if this is with or against the trend. The target objectives (#1, #2, and #3) should be used as the new Critical Range parameters. For example, a market opening down at 128000 is in a position to reverse the Minor trend (MIN UP 128150) and would be expected to trade lower down to 126500***2 -c, the #2 target. 128150***1, the #1 target, has now become resistance and is a low-risk sell opportunity. 128150-126500 encapsulates the new Critical Range. If the market cannot sustain trading below the 128150***1 level, it would indicate a buy opportunity with high reliability. The trader should expect a quick rally up to at least 128750*, with 129000 DP the initial upside resistance target. It should be noted that in this example the rally would be counter trend and offer additional selling opportunity and not a new up trend. Only a breakout above 131030***1 R would produce a fresh buy signal with high reliability.

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