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The Truth
About the “TREND”
Market Flow Analysis Method
(“MFAM”)
“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) in
existence. 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 Markets ALWAYS move within the framework of an Underlying Market
Wave. Otherwise, known as a TREND, whether it be Up, Down, or Sideways.
Market Flow Analysis Method
(“MFAM”)
“Three Primary Waves (TRENDS) in the Markets!”
There are only Three (3) Primary Waves (TRENDS) in the Markets:
1) UP Trend – A Series of „Higher Highs‟ and „Higher Lows‟
2) DOWN Trend – A Series of „Lower Highs‟ and „Lower Lows‟
3) SIDEWAYS Trend – A 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 Stages of the Trend and not after the fact.
Market Flow Analysis Method
(“MFAM”)
“Starting the Market Flow Analysis Method Process”
In 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.
Market Flow Analysis Method
(“MFAM”)
HIGH
LOW
HIGH
LOW
The Penetration UP through the
HIGH of the INITIAL SWING indicates
the beginning of a new Up Trend
The Penetration DOWN through the
LOW of the INITIAL SWING indicates
the beginning of a new Down Trend
“The UP Trend Market Flow Process”
A series of “New Highs” (NHs) and “Active Lows” (ALs)
Market Flow Analysis Method
(“MFAM”)
LL(Lowest LOW)
AL(Active Low)
AL
AL
MRAL(Most Recent Active Low)
HIGH
NH
NH
NH
PL
PL
PL
PL
LOW
“The DOWN Trend Market Flow Process”
A series of “New Lows” (NLs) and “Active Highs” (AHs)
Market Flow Analysis Method
(“MFAM”)
HIGH
NL
NL
LOW MRAH
AH
AH
AH
NL
(Most Recent Active High)
PH
PH
PH
PH
“The SIDEWAYS Market”
A series of relatively “Equal Highs” and “Equal Lows”
Market Flow Analysis Method
(“MFAM”)
HIGH
LOW
AL
“An UP Trend Reversing Into A DOWN Trend”
Downside Penetration of the Most Recent Active Low (MRAL) in the MFAM
Market Flow Analysis Method
(“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 a
DOWN Trend at the Downside Penetration of the MRAL
PL
PH
NH
AL
PL
NL
“A DOWN Trend Reversing Into An UP Trend”
Upside Penetration of the Most Recent Active High (MRAH) in the MFAM
Market Flow Analysis Method
(“MFAM”)
NL
MRAH
AH
AH
NH
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 UP
Trend at the Upside Penetration of the MRAH
PH
PL
AH
NL
PH
