Boxes Indicator: Understanding & Using
Boxes are a very helpful tool for navigating your way through a trading day. They take a little bit of time and effort to learn, but once you "get it" you'll find they're a tool you have a hard time trading without.
They are essentially telling you that there was a strong buying or selling attempt that moved the market, short term, in a "vertical" manner and then that this vertical movement has come to an end. The box then becomes a smaller containment or "playing field" that we can analyze and make sense of.
Boxes give us information on the "micro" and the "macro" level. On the micro level, an individual box is giving us decision points and can often be used as part of the entry/exit decision. On the macro level, how boxes inter-relate to each other throughout the day tells us when buyers vs. sellers are more in control, when the market is trending vs. consolidating, and when the market might be running out of steam or reversing.
For now, however, just think of an entire trading day as a "book" and think of each box you create throughout the day as a "chapter" in that book.
The videos below will explain several things about the Boxes Indicator:
Video 1: Micro Box Logic
What is the market's "expected" behavior when a box forms? This is a VERY important concept to understand.
Video 2: Macro Box Logic
What "story" are the boxes throughout the day telling you?
Illustrations: Box Logic Drawings
Below the videos, there are some graphics that will help you better understand box logic.
Video 1: "Micro" Box Logic
Video 1: "Macro" Box Logic
Illustrations: Graphic Examples Of Box Logic
What is the basic/generic expectation of a box?
What if buyers are strong?
What if buyers are really strong?
What if sellers are strong?
What if sellers are really strong?
What happens if acceptance or failure runs out of steam?
What happens if the market tests the box high/low and retreats back into the box?
(we now have the rejection indicator as well)
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