Who Said You Can't Pick Tops and Bottoms? How to Master Market Rotations

If you’ve ever heard the trading phrase, “You can’t pick tops and bottoms,” you’re not alone. It’s one of the oldest sayings in trading—and for good reason. Calling major reversals is tough, especially in the fast-moving world of futures. But as pro trader Justin from The S&P 500 Roadmap explains, it is possible to identify these inflection points with the right tools, techniques, and mindset.

 

The power of market rotations

 

At the heart of Justin’s strategy is the concept of market rotations—points where price action shifts direction after reaching a key high or low. While most traders try to avoid catching falling knives or shorting runaway rallies, Justin’s approach is all about pinpointing where those turns are most likely to occur using multiple time frame analysis, divergence signals, and market structure.

 

Building the “scaffolding” of the market

 

To spot these rotation zones consistently, Justin builds what he calls the scaffolding of the market: a framework of price levels based on historical swing highs and lows. These are not random support/resistance lines drawn after the fact—they’re calculated and mapped out well before price ever returns to them.

By analyzing years of price data on hourly and higher time frames, Justin identifies key levels where markets have previously reversed, rejected, or consolidated. When price revisits these levels, they often act as magnets for new rotations—whether it’s a sharp reversal or a strong continuation.

 

Divergence across time frames

 

One of the most powerful confirmation tools in Justin’s method is divergence, particularly when it occurs across multiple time frames. Using indicators like the Relative Vigor Index (RVI), divergence appears when price makes a new high or low but the momentum indicator does not.

Justin compares divergence on charts as small as a 512-tick chart up to daily, weekly, and even quarterly time frames. When a divergence signal on a 3-minute chart aligns with a larger signal on a 1-hour or 4-hour chart—especially at one of his predefined scaffolding levels—that’s a strong clue that a market rotation is likely.

 

Stacking the odds in your favor

 

This isn’t about guessing. It’s about stacking the odds in your favor by waiting for the market to reach a well-defined level, seeing confirmation from multiple time frames, and entering with a clear risk plan. Justin’s strategy focuses on tight entries and controlled risk, aiming for trades that can yield high reward-to-risk ratios.

Justin identified major market moves—like a recent multi-thousand-point pullback in the S&P futures—based on divergence signals from the quarterly chart. When long-term time frames align with short-term signals, the potential for meaningful rotation grows.

 

Trade tops and bottoms with confidence

 

Picking tops and bottoms may not be easy—but it’s far from impossible. By combining precise technical levels with powerful divergence signals across multiple time frames, traders can identify areas of potential reversal with confidence.

If you’re ready to stop chasing the middle of the move and start anticipating where the market might turn, mastering market rotations could be the trading edge you’re looking for.

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