Market Sequences: A Simple Way to Read Price Action
Why Thinking in Sequences Improves Chart Reading
One idea that helped me a lot over the years is thinking in sequences.
I first picked up on this from Don Miller, an S&P day trader who talked about market sequences in his trading….
And once you start looking at charts this way… I think it’s hard to go back.
SEQUENCES
Think of a sequence as a run of related price behaviour.
A pocket of action where the market is trying to achieve something.
For example:
- A trend drive pushing higher
- A liquidation flush lower
- A range rotation
- A pullback within a move
In simple terms…
A sequence is a short story the market is telling right now.
Many traders look at charts bar by bar… But a more useful question is often:
“Which sequence are we in… and what sequence might come next?”
Let’s look at a quick example from Nasdaq the other day.
Here are the sequences as I see them
1 – Choppy open, no clear direction
2 – Drive higher
3 – Pullback and retest of highs
4 – Backfill toward the open
5 – Price discovery towards Y low
6 – Range-bound chop
Now compare that with this S&P chart, which had fewer sequences on a different day:
1 – Gap fill
2 – Price discovery higher
3 – Pullback and retest
4 – Choppy range
And this is where the framework becomes useful.
Because once you start thinking in sequences… You begin playing what I call “chess instead of checkers.”
Instead of reacting to every candle, you start asking yourself:
What’s the next likely sequence?
And what evidence would confirm it?
For example:
If you miss the gap-fill sequence in that chart above, your plan might be:
Look for strength after the gap fill for a push toward the highs.
Or you might think two moves ahead:
“If we gap fill and then rip… I’ll buy the first pullback.”
This works on any market and any timeframe.
Sequences aren’t a textbook pattern per se.
They’re more like phases of behaviour the market tends to cycle through:
- Discovery higher
- Rotation in a range
- Drift back to VWAP
- Momentum drives
- Liquidity flushes
Framing the market this way helps you:
- Stay patient and wait for your play
- Anticipate instead of reacting to price
- Identify which sequences you trade best
- Spot the clues that often appear before a sequence shifts
- Avoid rubbish conditions
- Not rushing into something just because it’s moving (I’ll wait for this sequence to finish)
If you like the idea… try marking sequences on your charts for a week.