Midas Analysis

Trading and Technical Analysis with MIDAS

Price Action on S&P EMini (ES Futures)

 

As we’ve shown in numerous examples, launching MIDAS S/R curves at swing highs and lows produces curves that capture many of the major price moves.  What did MIDAS say about the ES futures today?  Let’s look at the ES 1 min chart above.

 

S1, launched at the morning low right after opening, is quickly retested (highlighted in gray), and price rises up.  Price doesn’t seem to have a lot of momentum, falling back to the S1 and consolidating across it.  This isn’t a clean bounce or slice through as we often expect, but it’s common for sideways trading — price volleys back and forth across a major MIDAS line.  After 45 mins of consolidation price picks up and forms some morning highs.  Launching an S2 curve at the swing low of the consolidation, we see it catches the 1st pullback.

 

As the uptrend runs out of steam, we launch an R1 from its peak.  Price comes down to test S2, a little bounce, and then it rolls over cutting through it.  What follows is nearly an hour of range bound trading between S1 and S2.  Price eventually pushes up through S2 and moves past R1 in a single bar, but does a retest of S1 and rolls back over, falling first to S2 and then back to S1.  Price again tries to climb back up toward  S2 and R1, consolidating, until it pushes up above R1.

 

With the rapid push up from S2 through R1, we launch a TopFinder curve TF1, which predicts the top prior to consolidation, when matching it to the 1st mini pullback.  Price consolidates in a larger pullback, and then makes the high of the day, where we launch R2.  Price falls back to R1 and then returns to test R2 twice, where we launch R3.  Price slices back through R1 and consolidates around S2.

 

Prices moves in to retest R1 and R3, and failing that slices through S1 and S2 and continues downward to make lows of the day.  A TF2 TopFinder could be launched from the R1+R3 failure, matched to the first pullback, and accurately predicts both the next pullack and the full downtrend of 15 points.

 

The outline here shows how the S/R curves can be applied to the S&P emini.  Throughout the day many of the swing highs/lows were made against MIDAS curves.  These curves were often used as points to retest during pullbacks… when successful price pushed upward, and when unsuccessful, price often rolled over and sank.  The third role for MIDAS here is that when price didn’t respond with a bounce or slice through, it would often consolidate along the curve.

 

This outline showed quite a few curves (and many more could have been shown) to illustrate how often price reacts to MIDAS S/R curves.  This chart is particularly detailed, with 1 min bars shown.  The resolution and number of curves could have been reduced to focus more on the major moves.  On the other hand, in active daytrading, we would have focused on the recent price action, launching curves from swing lows/highs as they develop, and confirming their value as trading plays out.

 

 

Price Action on Russell 2000 Futures

Above we have a 2 min chart of TF futures from today, showing a fairly large number of relevant MIDAS curves.   Walking through the price action….

 

R1:  We start with a swing high, where we launch R1.  It’s immediately tested, price falls down and retests twice about an hour later.

R2: Price comes back toward the R1 again around 8:15 but can’t make it up there, so we launch an R2.  Price falls away from it.  Back for a retest at 8:30 and down again.

S1: Price bottoms out and goes for a another test.  We launch S1 at the swing low.  By 9:00 it tests S1, bounces off of it and slices up through R2.  It continues to push up through R1, clearing the way for some upward action.

S2: Price does a brief retest, and we launch an S2.  After the retest, price shoots up again.

S3: Price consolidates and we launch an S3.  Price immediately pushes up again, and returns to S3 to test.

 

Later in the day, we launch an R3, which is used as resistance, followed by an S4.  After S4, price slices through R3 and uses it for support in the next hour and a half.  As price climbs, we add an R4, which serves as resistance for the next 20 minutes.  Price meanders between S3 and R4, finally slicing through R3 and S4 in one bar, and bouncing between S3 and S4 until the close.

 

This example shows a particularly large number of MIDAS S/R curves, but this illustrates how frequently these are used for support and resistance throughout the day.  It also shows how often a bounce/slice through the curve leads to subsequent price movement.  Every one of these curves catches subsequent price action with a high degree of precision.

 

 

 

 

Support Curves with TopFinder on S&P (SPY ETF)

 

The chart above shows a 3 minute bar chart of the SPY ETF.  It includes a set of 3 MIDAS support curves, followed by a TopFinder curve.

 

The first S1 curve was launched at the low of the day.  30 mins later it caught the first pullback accurately.  From the pullback, we launch a new S2 curve.  Price moves up and then returns to retest.   From the next pullback, we launch an S3 curve.  Additionally, we launch a TopFinder curve, and adjust it to fit the next few bars.  Afterward, the closest we come to a pullback is at 7:45.  Fit to this low, TopFinder tracks the trend to the correct bar.

 

Several rectangles have been drawn to illustrate interactions between price and S curves later in the day.  The first box shows two bounces off of S3, which is finally broken around 9:30.  Price moves down to test S2, but bounces back up and goes through S3.

 

 

MIDAS with FOREX – EUR / USD

 

MIDAS can be used in nearly any market.  In the example above, we have today’s euro/dollar market on FOREX, plotted as 987 tick bars.  It shows a single MIDAS support curve along with the TopFinder curve.

 

As price moves away from the low of the day, a MIDAS support curve can be launched.  About 30 mins later we see the first pullback.  Since the price does not come all the way back to the S curve, we can tell it’s an accelerated trend.  In this case we’d add a TopFinder curve from the same launch point, and adjust its volume fuel so the TopFinder intercepts the pullback.

 

TopFinder is successful here at indicating the near top of the market.  When TopFinder reaches the end, it’s a good time to sell or to use the curve as a stop.

 

Also, notice the original S curve is finally tested about 3 hours after it was launched.  The retest is successful, but price moves into a sideways market.

 

Hierarchies of Support and Resistance (expanded to ticks)

 

Let’s expand the previous session, detailing the later part of the day, since there’s a lot more we can show.

 

We usually see MIDAS applied to time-based bar charts, such as minute, hour, month, etc.  MIDAS can be used just as well on tick charts, such as the 266 tick chart shown above.

 

We’ve shown how MIDAS illustrates support and resistance lines.  Launched from various pullbacks, we can produce MIDAS curves that capture every future pullback with excellent accuracy.  Three of the curves shown are natural locations we’d launch them from.  One (turquoise) is slightly unusual because it’s a minor pullback, but it has value since it demonstrate the subsequent sideways movement, catches the next 2-3 minor pullbacks accurately, and about an hour later it captures a major pullback perfectly.