Trading in a News-Driven, Volatile Market

by | Apr 13, 2025 | Chart of the Week Past

In this Educational Chart of the Week Below,  

We Review Trading in a News-Driven, Volatile Market

This Wednesday - Trading the News: What Really Moves Stocks! Register Here

The Master Trader top-down method of stock market analysis is a comprehensive approach that starts with a Techno-Fundamental perspective and narrows to individual stocks.

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Trading in a News-Driven, Volatile Market

Market news drives price movement almost daily, but recently, that influence has reached an extreme. Real and Fake news cycles and uncertainty, particularly surrounding tariffs and geopolitics, have amplified market volatility.

In addition, the markets have clearly transitioned from a bull market into a bear market, creating an erratic environment that’s challenging for both swing traders and day traders.

So, what can you do in this kind of environment?

Define Tradable vs. Non-Tradable Patterns

As technical traders, we must adapt by focusing on price patterns we can define—and just as importantly, knowing when not to trade.

Start with a basic pattern, but always view it in the context of the broader trend and the location of support and resistance (or the lack thereof). Without context, a pattern is meaningless.

Charts are a Picture of Traders' Actions, Beliefs, and Expectations Created with Money.

Chart Example: Russell 2000 Daily Timeframe

The price pattern in the chart above is not unique to the Russell 2000—it’s prevalent across many major indices, sectors, and stocks right now. That in itself is unusual, reflecting how much the market has changed.

  • In February, the broader markets peaked around options expiration.
  • As tariff news began to trickle in, prices started falling in an erratic fashion.
  • At the March options expiration, markets attempted to stabilize and possibly retrace, but the escalation of tariff-related headlines drove prices sharply lower into the end of the month.

This acceleration lower is a textbook sign of short-term trend exhaustion. Normally, we’d expect stabilization and a contraction in bar ranges after that—but this market is anything but normal.

Instead, tariff headlines continued to fuel large moves, resulting in a wide range outside the bar, a signal of extreme uncertainty.

The two following trading days were inside bars, showing volatility contraction—but they don’t offer a high-probability opportunity on the daily timeframe. As swing traders, we stand aside until a clear, tradable pattern emerges.

Intra-Day Trading: 65-Minute Chart of the Russell 2000

Let’s drill down to the 65-minute chart, which we use for longer-term intraday setups.

Just like with swing trading, we analyze:

  • Trend direction
  • Support and resistance
  • And price pattern structure.

On this chart:

  • A bullish igniting bar breaks above resistance.
  • Price pulls back and forms a higher pivot low (PL), which is successfully retested.
  • The session ends with a bullish move, suggesting a potential push toward the prior pivot high (PH).

This setup creates a short-term bullish bias that traders can use to trade on smaller intraday timeframes.

Master Trader Key Points

  • As swing traders, knowing when to stay on the sidelines is critical. No pattern, no trade.
  • As intraday traders, we can still find opportunities by zooming in and aligning lower timeframes with a developing bias.

This isn’t a historically great opportunity, but it’s what the market is giving us right now.

Join us in this week’s MT Live, where we’ll review real chart examples of how patterns are forming, working—and failing—based on the ongoing flood of news.

We'll walk through how to trade (or not trade) in a volatile market.

Master Trader and You Building Your Financial Future Together!

Happy trading!  If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com