Efficient vs Inefficient markets

When trading there is a few things that I like to look for this criteria has many names online yet when coming from me I like to explain this is these sayings inefficient, efficient movements. Efficient movements being what we have here highlighted in purple.

The movement pattern that we see here is one of consolidation or contracting volatility . When volatility in a trading pair drops we can see a tighter ranges appears vs when we see and expanding volatility and inefficient markets.

When we have markets that witness Efficient movements these are usually markets that can break to the upside if they continue to see these small price range moves. Inefficient markets are the opposite of what we have above characterized as markets where the range is expanded and usually to the downside as volatility increases.

Efficient and Inefficient markets patterns can be found as fractals found within each market notated by the white line. Knowing where these states exists within the market is important for market timing as a trade closer to the mid line would see a very bad trade placed.

Knowing the difference between when a market is efficient and inefficient can be key in bettering your trading style allowing for better entry and exit points as you can see where the market likes to sell off where volatility gets to low and where it is being bought from where volatility is to high.

Efficient and Inefficient market patterns