Matrixchannel™ Indicator
Quality Trade Setups
Know the Trend
High-Probability Exit Points
Identify Low Risk, Large-Reward Trades
“I use the Matrixchannel resitance lines — to verify if I will make a trade; and to help me know which price levels to buy and sell options at.”
J.C., trader
A hidden matrix guides the destiny of each market. It is a set of lines of force that are present before any market action, and not dependent on it. These are not trend lines, or Fibonacci ratios, or Gann lines, based on past data.
They can be the key to seeing the REAL forces that influence the path of market action.
They can be used as support or resistance levels; or as a timing tool.
They can form clusters, which inhibit market action and create trading ranges. The lines can also give a hint on when the market is free to move quickly.
Try Out the Matrixchannel Indicators:
LIVE-STREAMED on our site
We provide loads of training. Check out examples, below on this page!
“I made 40 points on the S&P. I went short and made 30 points and then went long and made 10 points.”
P.P., trader
This is LIVE-STREAMED, and as such, will experience GLITCHES
We wish it was different, but with the number of steps involved to live-stream, it is a reality.
It’s ALWAYS important for you to watch your Trading Platform, a company with huge resources to keep you up-to-the-nano-second in data. Always know your target line/price. That way, if the system drops, while we are working to bring it back online, you can watch the market on your Trading Platform to see if the market gets to your Target Price.
A common question: Why don’t we offer this on trading platforms?
This is not like a simple MACD line to add to your chart. There are multiple moving parts in the code. And although the Matrixchannel Indicator works on any market (we offer futures, the continuous contract); setting up a new view takes time…because of those multiple moving parts.
Give the Matrixchannel Indicator a try!
Matrixchannel Lines for Identifying Market PRICES
Allen’s emphasis has been on Time and Time Cycles. However, trading would not be complete without considering Price. The Matrixchannel Lines represent important Price levels for the market. They can be seen as Support and Resistance lines, and can also give clues about the types of market behavior coming up. Sometimes the lines can forms clusters, which influences market behavior. These lines are unknown to the general public, that means you, as a user, have an advantage over other traders and investors.
LINE CLUSTERS:
When the market runs into a cluster of Matrixchannel Lines, it often reverses and goes back to the previous cluster.
Or when the market breaks into a cluster, it can take a lot of time to get through the multiple resistance levels in that cluster.
When the market does break through, it often will shoot through the big space until it hits the next cluster.
TRADE VIABLITY:
Measure the distance between the Matrixchannel Line triggering the trade (long or short), and the next line above or underneath. If those lines are too close together, there may not be enough room before the market runs into a support or resistance level to produce a trade worth the risk.
Better is to take trades where the distance between those lines is fairly large.
STOPS:
Determine if a trade is worthwhile, based on the return/risk ratio. Before getting in the trade, measure the distance of the entry level to the planned stop. Then consider the potential price of the exit, and determine the return-to-risk ratio (as to whether it suits your trading style).
Below are possible uses of the Matrixchannel Indicator
Any trade you take should be within your own risk management protocols
Suggested trading rules
ENTRIES
Short Entry on Market Reversal (including a MOVING AVERAGE. On the Day Trading chart, we show a 22-bar exponential moving average):
If the below three conditions are met individually and exist at the same time, taking a short position is viable.
1. The market goes to a resistance level and then comes back down; and
2. The market closes below the moving average; and
3. The moving average turns down or is already down.
Long Entry on Market Reversal
If the below three conditions are met individually and exist at the same time, taking a long position is viable.
1. The market goes to a support level and then comes back up; and
2. The market closes above the moving average; and
3. The moving average turns up or is already up.
Short Entry on a break BELOW a new Matrixchannel line:
Entering on a falling market breaking below a new line is a valid entry, but is higher risk.
Entering any trade close to the moving average is usually a lower-risk trade. Further from the moving average has higher risk.
Long Entry on a break ABOVE a new Matrixchannel line:
Entry on a rising market breaking above a new line is a valid entry, but is higher risk.
Entering any trade close to the moving average is usually a lower-risk trade. Further from the moving average has higher risk.
Candlestick patterns:
Short Entry, using Bearish candlestick patterns:
When the market is going up into a resistance-Matrixchannel lines, and the candlesticks start creating one of the negative, bearish patterns, then it’s reasonable to use that candlestick pattern as the basis for going Short.
Long Entry using Bullish candlestick patterns:
When the market is going down into a support-Matrixchannel lines, and any of the bullish Candlestick patterns are developing, then it’s reasonable to use that candlestick pattern as the basis for going Long.
Combining Candlestick Patterns and Moving Average for Entry:
When a Bullish or Bearish Candlestick pattern happens at the same time as the Moving Average turns Up or Down, that can be used as confirmation for each direction, for a higher-probability Long or Short trade.
EXITS
Short Exit: it’s viable to exit a trade at the next lower line or cluster, if the profit potential is larger enough (based on your risk/reward parameters).
Long Exit: it’s viable to exit the trade at the next higher line or cluster (if your risk/reward parameters fit your risk tolerance).
See below for Exit techniques for clusters.
You may choose to stay in trades longer, because often the moves continue further. But we don't have specific suggestions on that, at this time
STOP PLACEMENTS
Always use a Stop: Place a stop above the nearest swing-high for a short trade, or swing-low for a long trade. You can trail it with a number of different techniques.
Also refer to Stop place in the explanation of Matrixchannel clusters.
CLUSTERS of MATRIXCHANNEL LINES
When Matrixchannel Lines cluster together (as in a bunch of them are near each other), often a big space shows between the clusters (because they are quantum levels of the same lines).
ENTRY on breaking Above or Below a Cluster:
Short Entry: When prices break down below a cluster, and several trading bars close below it, it’s viable to take a Short position. (Stop placement is always recommended. A viable Stop position for a Short entry is above the highest bar that closed below the cluster.)
Long Entry: When prices rally above a cluster, and several trading bars close above the cluster, it’s viable to go Long. (Stop placement is always recommended. A viable Stop position for a Long entry is below the lowest bar that closed above the cluster)
ENTRY on Market Reversal between clusters
Short Entry: When prices rise above a cluster, and reach the next upper cluster, often the market will reverse, and then head back to the lower cluster. This can be a Short entry, IF the Moving Average has also turned down. (This is a higher-risk trade, but is useful if the moving average is in the Short direction.)
Long Entry: When prices fall below a cluster, and reach the next lower cluster, often the market will reverse, and then head back to the upper cluster. This can be a Long entry, IF the Moving Average has also turned up. (This is a higher-risk trade, but is useful if the moving average is the Long direction.)
EXITs for clusters:
From a Short position: Exit when the market reaches the highest price of the lower cluster.
From a Long position: Exit when the market reaches the lowest price of the upper cluster.
CLUSTER OPTION TRADES:
From One Cluster to the Other: In the most recent year, about 75% of the time the market shoots quickly to the next cluster, once it gets above or below a cluster. This shooting activity could produce a reasonably good option trade. Because if the market moves, it will move quickly. To use this: you can buy a short-term option with very good leverage.
Within a Cluster: Often, when the market is in the middle of cluster, it can take a lot of time to get through that cluster. The market bounces up and down amongst the lines, which is more of a trading range behavior. You might consider selling options when the market is in that range, where it's bouncing around in a group of lines.
HOWEVER, SELLING OPTIONS CARRIES MUCH GREATER RISK THAN BUYING OPTIONS. ONLY SELL OPTIONS IF YOU ARE WELL EXPERIENCED AND KNOWLEDGEABLE IN THAT FIELD
ICHIMOKU CLOUD INDICATOR: This is included, using Allen’s unique settings that make the Cloud much more relevant to shorter-term trading.