Good morning guys! welcome back to the channel! Figured I'd pop on this morning and do a little quick morning review for everyone. Um, so obviously the past couple days we've been in, uh, more than a couple days we've been in this, uh, pretty wicked consolidation. So what we're going to do real quick is pull up this chart here and pretty much just look at this. So this is what we've been dealing with the past.

Uh, it's called like a week and a half or so is a long consolidation, All right. So if we look at the market essentially back from here in this cross, we really just traded into a sideways Market just rattling back and forth back and forth back and forth. Now, of course you don't really know it's consolidation until of course consolidation starts to occur. which is the back and forth rallying from supply and demand.

Ideally, this is where a supply and Demand Trader is going to have, um, a lot of success. essentially trading from low to high, low to high, low to high in a trending Market A Supply and Demand Trader will not find as much success because again, supply and demand trading is basically support and resistance trading. And obviously, if the market is trending, then you're going to be breaking supports or breaking resistances et cetera. Etc But anyways, what I want to do is cover at least one little kind of rule that I like to follow here that helps me identify.

We can very well be leading into consolidation. So for example, we're looking at these crosses and it's not a for example, I mean this is this is it. So you have a cross here and you have a cross here. Okay, and you have a cross here and here and here.

and pretty much there. All right. So the concept is is when looking at moving average crosses, ideally you're looking for a signal and Direction on the market, whether that's bearish or bullish. Okay, and when we get two back-to-back opposing crosses in a short period of time, whether it's a day or like a couple days.

Um, and there isn't a lot of follow-through with the move in One Direction or the other, we like to consider that we're going into consolidation. So what I mean here is we get a Buy Signal the market rallies a bit and then It ultimately reverses, and then we get a sell signal. So that is two back-to-back opposing crosses in a pretty short period of time. And then even if that didn't convince you, you can see we get another cross here.

So that's one, two, three back to back crosses in a short period of time. At that point, you should automatically be considering to yourself that you're in consolidation. So you're essentially going to map off the high and the low of the consolidation rallies Peaks troughs Etc and then just expect that everything in between is going to be choppier, consolidating environment and that you should not be trusting. Uh, the crosses for Trend signals, All right.

So what we're going to do is, we're going to go back in this chart just a little bit more. We'll do like this 30 days. All right. So here's a good example of when you can start to realize you're going into consolidation.

Okay, so if you look at this cross. Okay, so we have a cross and the market follows through and there's no bearish cross until here. Okay, then the market goes into a downtrend. Okay, and then there's no cross until here and the market rallies.

And then there's no cross until here. Okay, and then the market drops. Okay, so look at the difference between this cross, this cross, this cross, and this cross in comparison to this. Then to this: Etc Okay, there isn't really any big trending follow through with this cross.

There's no big trending follow through with this cross before reverses. Okay, so this is like two back-to-back crosses with not really good, or, uh, extended follow-through without reversing on itself whereas this cross continues to trend for a while. Then we get across this trends for a while. Then we get across that trends for a bit and we get across and that trends for a bit.

So the concept here is when you're getting crosses that have good follow-through without a new cross occurring. Okay, and when you get crosses that have follow-through without a new cross occurring without follow-through you're into more of a trending ebb and flow. Market It's when you get across with no follow-through or very minimal follow-through and then the next day or a couple days later, you get a new cross in the opposite direction with very minimal follow-through before it starts to go the other way. That's where you start to say to yourself, you're in consolidation.

So what I do is I Use the rule of two back-to-back opposing crosses within a very short period of time generally means we're going to be seeing consolidation. That consolidation could last for a couple days a week. two weeks sometimes. Um, but you have to at least see two back-to-back opposing crosses to consider it.

If you're getting three, you can pretty much guarantee urine consolidation. Okay, but the earliest that you can start to get that idea based off of this moving average system is by using two back to back. And so if you're new to the channel which you may or may not be, this is, uh, on a 30 minute chart and it's an open, high, low, closed chart. So essentially you would just go into your settings here on a thinkorswim chart.

or if you're on trading view, you just need to make sure that you're only running regular hours. Some will say start aggregation at Market open. Some will just say regular trading hours. Uh, it's probably more common for just to be called regular trading hours where you're not looking at extended hours and that's going to make sure that your 10 and your 50 SMA are set up properly.

So this whole system or this moving average system would be a 10. and 50. SMA and you'd be running it on a minimum 10 day 30 minute chart. And the reason I say 10 day is you you really just want at least 10 days of look back.

So you're really just using the regular trading hours chart 1050 SMA on a 30 minute time frame with a minimum look back of 10 days. If you're using trading menu, go to a 30 minute time frame. It's just going to give you whatever look back it gives you. but we're on something like think or swim or maybe another platform.

You may be given the option to add days to the time, etc. etc. But it doesn't matter if we change this from 30 day to you know, 180 days, the moving averages are still going to be the same. You can just look back further at sort of that system.

Okay, so just want to come out, make the video, let you guys know. Obviously we're in consolidation. doesn't take uh, a brainiac or a rocket scientist. figure that one out.

So the best recommendation in terms of what to do would be just watching the highs and the lows. Okay, and essentially just waiting for the break. And then you're gonna trust the signal into that move. So what I mean is If This Were To break down, there's going to be a sell signal that occurs That leads to the breakdown.

Okay, and if this breaks out, there's going to be a Buy Signal at least that and it's essentially that signal that creates the breakout. the one you're going to trust. But every signal in between like here and here and here. If it doesn't break out, it's it's going to be a false cross most likely.

So that's what we're waiting for. So the way that I've been watching this is we had a Buy Signal that worked okay following day. uh you know we Gap up and then we cross back down and then at that point it said we're in consolidation and pretty much this map below and the high and said now every cross in between the high and the low is going to be a false cross. There is a Buy Signal followed by a sell signal followed by a Buy Signal pretty much followed by a cell signal right there.

Um, so there's been multiple false signal crosses in between and it's only when we break out of that range that we are going to see, um, the signal that's generated legitimately work. Okay, and uh, so far today things are looking okay. Um, if you look at the chart here, you know this seems uh, pretty decent. I mean we're getting we're getting very coiled into uh, this consolidation so shouldn't be too much longer before we get some sort of, you know move.

Whether run a trend line like that, you might splice it through the bodies. it'd be somewhere like, right about there. So if you're even looking at like patterning consolidation, you know we are essentially getting pretty tight in this consolidation. The range is starting to come down a little more so ultimately.

I'd assume another couple days here and we'll get some resolution on this coiling and this channel. So with that being said, everyone take care and I'll catch you on the next video.