Midas Analysis

Trading and Technical Analysis with MIDAS

Introducing MIDAS – The Basics and How To Use It

MIDAS was created by Paul Levine, who introduced it in his lecture notes as a system “designed to focus attention on the dynamic interplay of support/resistance and accumulation/distribution which are the ultimate determinants of price behavior. Indeed, a Midas chart makes immediately visually apparent an unexpected degree of orderliness in what might otherwise seem to be a random or chaotic process.”  Levine also referred to the market as a “complex non-linear dynamic system” and used MIDAS curves to represent the hierachy of support and resistance.

 

At its core MIDAS is a technical analysis tool based on anchored VWAP curves.  VWAP refers to Volume-Weighted Average Price, where price is averaged over a period with each point weighted by volume.  The MIDAS period starts with a launch point, selected by the trader, and continues on to the present.   The launch point is usually set to the swing high or low of the period being considered or some other noteworthy market event (e.g. start of day).  Curves can be launched and used on any time frame, and they provide insight whether you are trading on 1 min bars, 30 min bars, days, weeks, months, years.

 

MIDAS can be used in numerous ways, however, the most common use is to launch curves at market event, such as swing highs and lows, and monitor how price interacts with the curve.  After trending away from the curve, price often returns to the MIDAS curve, which acts like a dynamic support/resistance: price often bounces, which confirms a trend in progress, or slices through indicating a reversal or sideways market.  In this model, MIDAS curves are used like trend lines or pivot points — price tends to move between these areas.  Traders can open positions based on how price responds to the curves — a bounce is a good time to buy and a slice is a good time to sell or reverse.

 

There are also a number of tools in the MIDAS family beyond the basic MIDAS S/R curves.  Levine introduce a second tool with extraordinary predictive potential, called the TopFinder (or BottomFinder), which I’ll be covering in more detail later.  Over the years, traders have expanded Levine’s work and introduced additional tools, including displacement channels, standard deviation bands, OBV oscillators, MIDAS curves of oscillators, and more.  These tools offer additional insight into MIDAS trading and resolve most of its limitations.  Despite the insight these other tools provide, I’ll be focusing on the core MIDAS S/R for now,  since it’s the foundation of the advanced MIDAS curves.