Understanding the Three Main Types of Trading Days in Stock Index Futures - Support & Resistance Levels

Support & Resistance Levels

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Understanding the Three Main Types of Trading Days in Stock Index Futures

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Today’s somewhat volatile but choppy/ two sided price action in stock index futures,  encouraged me to share the following with you on the different types of trading days:

  • In my opinion there are 3 main types of trading days.

1. The most common day are two sided trading action with swings up and down – this type of trading day is most suitable for using support and resistance levels along with overbought/oversold indicators.

2. Strong trending days, mostly one directional – this type of trading day is the least common, many times will happen on Mondays and maybe 3-5 times a month at most – this type of trading day is most suitable for using ADX, MACD crossovers and pretty much looking for pullbacks to jump on the trend.

3. Slow and/or choppy trading days – this type of trading day is best suited for taking small profits from the market by looking at volume spikes, using stochastics as possible entry signals and usually wait for a pullback before jumping in.

  • A good question I’ve been asked is how can one asses what type of trading day we will have while the market is still trading….I have been doing some work in finding the answers and will be happy to hear feedback via email but here are some initial observations:

  1. Was the overnight session a wide, two sided trading range? If the answer is yes, good chances for similar trading day during the primary session (primary session is when the cash/stock market is open)
  2. Mondays have the highest chance for trending days
  3. The behavior of the first hour of trading can also suggests the type of action for the rest of the day.
  4. If the first 30 minutes of the trading day have good volume, better chances for type 1 or type 2 trading days.
  5. Low volume during the first 30 minutes can suggest a choppy (type 3 trading day)

 

 

 

If you are a day trader, below you will see markets that our proprietary ALGO has identified as being more suitable for attacking either from the long side or the short side for the next trading session.

Questions? We are happy to help!

 

 

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* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.

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