Tagged: easy

CCI Divergence For The Patient

So it is a trend day and you were not awake when the trend started. Where do you jump in???

CCI to the rescue!

I have developed a simple system that utilizes CCI divergence, TMA bands and 13 pip range bars to trade pullbacks, allowing you to enter trades in the direction of the trend.

On the chart 1) is a bullish CCI divergence.

2) Confirmation of the trend/trade direction

3) Entry signal – piercing of TMA bands.

It is important to wait fot the the TMA bands to be pierced. If they are not pierced, then no trade.

To keep this a low risk trade – use a 6 pip stop and target at least 12 pips.

 

EURUSD – Down, down, down

This morning saw the Euro pressured from the NY open. The following 3min chart shows that at 8:45am CST a market structure higher high was put in and price collapsed from that moment forward.

Today’s price action did not provide clear LH’s near the 21 EMA as it has in recent weeks, however, there were several “needles” into the cloud that were very tradable.

Although a lower high printed around 12 noon, I would like to see a higher low print before claiming the short sellers are done for the day.

Don’t Chase A Falling Market!

On Tuesday (11/16) I woke up late. I woke the family up and hurried them off to school. To make matters worse, I stopped for coffee. When I finally fired up my monitor I saw that I missed the start of a massive downswing.

In the past I would have immediately started to panic and would start selling at random points, not wanting to miss the big drop. I knew the drop was coming because price had been congested in a small range for a few hours so once price dropped below 1.3575 – the party would be on.

At the very far left of the 30 minute chart you can see that price made a swing high at around 1.3655 then immediately dropped to about 1.3575 before chopping around for the next 7 hours.

When I did cut on the screen it was a little before 8:30 and I usually don’t like to start trading during the equities opening bell. So I nervously sat and drank my coffee while the market continued to drop.

I wait 15 minutes and then start to look for opportunities to join the party. But with all of this selling, how do you know where to get in? I have all to often been the sucker selling the low of the day and then trying to decide how much pain I could tolerate before dumping my position at the high with a big fat loss! But not anymore! Losing money has a way of getting your attention like nothing else can!

A 3 minute chart with 3 moving averages is all we need to join any trending market – EVEN IF WE MISS THE INITIAL MOVE!

The moving averages are all exponential – one at 8, one at 13 and one at 21. (There is some voodoo or magic with the 21 EMA, I am still trying to figure out what it is…). When a strong trend is underway the 21 EMA seems to hold as support. Price may occasionally pierce the 21, but rarely closes above this magic line until the trend is over. Combining this with a little market structure, we can time our entries by looking for pullbacks towards the 21 EMA during a strong move. I have my charts color candles that make lower highs (LH) and lower lows (LL). I have also programmed my charts to make the space between the 13 and 21 EMA appear as a cloud. Any time price enters the cloud and the slope of my 3 EMA’s are still pointing down, I am looking to sell. Since LH’s are a three candle formation, you will not know that it is a lower high until the next candle closes. But once I see the LH has painted, it gives me the confidence to know that I got in at a good point. From the chart you can see that during this downtrend price entered my “cloud” 4 times (There was actually a 5th and a 6th that can’t be seen on this view). and each gave me my standard profit target of 21 pips, with relatively no drawdown.

If you have bigger balls than I, then each of the entries could have been a point to add on – building a nice sized position to really capitalize on the move. I am working on this, but not quite there yet… so I took the trade successfully 5 times losing on the 6th try as the trend started to reverse.

Now if only I could be this patient every day….

Price Action Trading…Or not…

For a while now I have been trying to become a pure price action trader. Well, as Jessie Livermore once said

“The game taught me the game and it did not spare the rod.”

What the game has taught me is that price action trading is for the disciplined screen watcher. Price action trading requires too much discipline for me! I have come to the realization that I need at least a couple of indicators to keep me from OVER trading.

My best trading was done in 2007 with just pivot points and a 21 EMA. Trading seemed real easy back then. I would just wait for price to hit support, then break the 21 EMA. I almost never lost using this method… and as I am writing this I can’t seem to remember why I stopped using it.

Anyway, I have starting using moving averages with pivot points again. I have added fractals and will even add the awesome oscillator to keep me in trades longer.

1 minute scalps

Above is a snapshot of today. I took 7 trades off of the 1 minute chart. All but 1 were winners. I’ll start posting what I’m doing in the coming days.

In the meantime – enjoy your weekend.

Identifying The Trend. Its As Easy as 1-2

Everybody has heard the cliche “the trend is your friend”. It is true, the trend is your friend until it ends. Once it ends, price will chop around and eventually a new trend will form and once again become your friend.

Well, since the trend is so friendly, how do you identify this sexy beast?

Easy.

Actually as easy as 1-2. No need for 3.

  • First pay attention. If your paying attention you really don’t even need a chart to determine the trend.
  • Secondly, just compare yesterdays pivot point with todays.

That’s it. Easy peasy lemon squeezy.

Ok, a little explanation. If todays pivot point is lower than yesterdays, guess what… the trend is down. Want even more confirmation? Look at the pivot for the day before yesterday. Get the picture?

No charts needed, no trend lines to draw. Just calculate the daily pivot points and you have a guide as to what price action is doing.