How I use Magister Price Projection Zones and Magister Bands

I remember a while back hearing someone say that since a particular market had made a new high that there was no “resistance” ahead. I laughed when I saw that because even though I knew that the person who said it was being sincere it is simply a false comment. There is ALWAYS support and resistance in a market because ALL market swings are connected in some geometric ratio to one another. It is a simple fact that I have observed time and time again through over three decades of trading.

It was this knowledge of the geometric relationship between market swings that led me to research and develop a new type of price projection system that I now call simply “Magister price projections.”

Its basic premise is simple…since all market swings are related geometrically what is the most common geometric ratio between market swings. Again, through a long process of trial and error, I found what I believe is the most common ratio relationship and used it to create an automated method of projecting price support and resistance zones in markets on various time frames based on defined price swings.

Instead of just talking about it though, let’s look at some recent examples (I recommend that you try printing out the following comments or viewing them in a different window so you can have them handy when you click on the chart to see it in full size):

60 minute chart of E-mini S&P 500 Primary Session (click to enlarge)

60 minute chart of E-mini S&P 500 Primary Session (click to enlarge)

Now on the 60 minute chart above we see examples of Magister price projections (the horizontal purple and white and yellow dashed lines) and “Magister Bands” (a revised version of Bollinger Bands I created to determine trend direction and to also use for support and resistance projections).

The gray, red and yellow moving averages shown are also part of the overall Magister Band mix that tells me what the prevailing trend of the market is at any particular point in time. And I will also use these same indicators on multiple time frames, particularly when I get a trade setup on a longer term time frame. When that happens I will go to the next lower time frame to try and see if I can get an early entry and reduce my risk even further.

The white average shown is a moving linear regression line which I have found to an excellent tool as well. It acts many times as a moving trend line and is particularly useful during defined pivot divergence setups as the peaks or troughs of those divergences often occur after the linear regression line has already exceeded prices.

But it is the Magister Bands, along with the 3 averages and the linear regression line, that tell me what direction the market is headed in currently. It is the other indicators like DQ signals, Defined Pivot and Trend Divergences, BX and BX clusters, and the Magister Price Projection zones and Pivots that give me setups to go counter to the prevailing trend. Lots of times these counter-trend signals produce some great trades. Other times, the trend is just too strong and you have to recognize that a counter-trend trade signal that fails is just as important as one that works but it tells you that the prevailing trend is very strong and that you have to reverse your position and get with it.

Notice how in instance after instance, the Price projections act as “attractors” of prices from one level to another, both up and down, almost like obstacles that a ball hits in a pinball machine. This is all done automatically and is totally based on that one geometric relationship between market swings that I found to be more common than any other. And when you get other DQ setup signals occurring near one of these projections you then know you have a low risk trade offering itself to you. You then have an EDGE that no one else has.

The Magister Bands are simply Bollinger Bands that have been shifted out 5 time frames. For example, a 3 minute chart would display bands from a 15 minute time frame; a 15 minute chart from a 75 minute time frame; a 60 minute charts from a 300 minute time frame, etc. etc. The same would apply to longer term charts but with some slight variations…a daily chart would display bands from a weekly time frame; but a weekly chart would display bands from a monthly time frame; a monthly from a quarterly time frame, etc. The middle average (the purple stair-step line shown) has two other averages above and below it that are 0.5 standard deviations away from it.

It is the Magister Bands that I use to tell me the overall “tide” of the market. If I get a counter-trend signal that tells me to go against that tide it needs to perform quickly and start showing some strong indications that the “tide is turning” or I will use the price projections and the other averages shown, along with the 2 and 3 standard deviation bands shown, to exit the trade and get back with the prevailing trend. The 3 averages and the linear regression line are there as counter balances or early alerts as to when the larger trend may be changing direction before it is fully reflected in the trend shown by the Magister Bands.

The bottom line though is that when you combine the trend indications of the Magister Bands and their accompanying averages, the price projection zones, and the counter-trend and trend setups defined by DQ analysis, you have an extremely formidable arsenal of indicators to give you a distinct edge over your trading opponents. And this is true whether you are trading off 3 minute time frames, daily, weekly or monthly. In fact, by combining as many trades from these different time frames as you can gives you what I consider the ultimate in risk management and consistent performance. But you have to be consistent, diligent and disciplined in their application and this is the stumbling block that typically separates successful traders and investors from unsuccessful ones. It is the mental game that will kill you every time if you are not careful no matter how good your indicators are.

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