In the world of forex education, there is a lot of terminology that can be confusing at times. Many educators may use similar terms but have completely different meanings. For example, in the world of market profile, there is the term “value area” which represents 70% of the price action in a given profile. At SMB we also have a “value area” which has nothing to do with the market profile definition and represents a range of values that are important when it comes to our form of volume analysis. So knowing your terminology makes all the difference in your understanding of market concepts and strategies. With that being said, in this article I want to clearly define market symmetry. Can you tell me what it means and how we use it? Exactly. Read on.
The word symmetry generally means that when you have a shape, both halves of the shape appear to be a mirror image of each other. Google defines it as: The quality of being made up of exactly similar parts facing each other or around an axis. In the market, prices tend to unfold in symmetrical ways at times which implies human emotion expresses itself symmetrically. What does this look like? You may know it as a range bound market. We call this market symmetry. Why? Because this market structure looks almost the same on both sides of a horizontal axis or time in this case. It also means that the market is attempting to stabilize after trending. All this information is important for the methodology that we teach at SMB.
Range bound markets? What good are they? Choppy markets are the worst you say, you want trending markets. Actually market symmetry offers clearer trading opportunities on both sides of the market since a clear support (range low) and resistance (range high) has been established by the market itself. In fact, within these symmetrical structures, we look for our most common trade setup: the trick which takes advantage of the false breakouts that are very likely in these conditions.
Market symmetry is a pattern that allows our traders to prepare for the next likely market possibilities once particular setups emerge and can be validated. Once the symmetry appears, as a trader you should be able to anticipate the most likely scenarios following. These scenarios can be expressed as particular price sequences, like the ones we provide in our training. This is the perspective that our traders have that allows them to recognize opportunities that most traders would just shrug off as a “choppy market”.
Market symmetry also implies that emotions in the market have “proportion” which is why fibonacci measurements are relevant to technical analysis. These proportions can highlight price levels of interest and help traders anticipate more likely price reactions in those areas. Can you trade off of these levels alone? Of course not, but they offer a starting point for further analysis.
Recognizing market symmetry is part of having a wide analytical perspective of the market of your choice. The more you can do to expand your perspective, the better prepared you are to take advantage of opportunities before they are apparent to the crowd. This is one of the key benefits that our traders enjoy. If you would like to learn more about what we offer, attend my upcoming webinar here.
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Marc Principato, CMT,
*No Relevant Positions
