The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
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Wednesday, January 28, 2009

fade the Fed trend

Quite a healthy trend today running up to the FOMC meeting. Early on after gapping up (above R1 & R2) on the Q's a base break set-up gave us a good long entry (pay no mind to the momentum indicator at this point) which ran us up to R3 where a lot of narrow-range chopping took place. After another push higher we were looking at our momentum indicator to see what would happen once the Fed minutes were released. This gave us a bearish momentum divergence, bringing price down to just below the daily 50-EMA, where we were able to close above.
{Correction} The chart below is labeled incorrectly, the solid green line is the daily 50-EMA, not the 20-EMA.
Using my cycle-stochastic indicator I got three entries (2 long 1 short). The 2 long entries were an opportunity to either add to, or hold the long position entered on the early morning base-break. The third entry was also a "holy grail" set-up; more encouragement to be long. The third signal was a result of the FOMC announcement that coincided with a bearish momentum divergence on this same indicator.Meanwhile, our QTICK barely pushed negative all day and the Advancing/Declining issues at their peaks were at a 2054:709 ratio (quite bullish).So, on our broader perspective, tomorrow can be quite telling. We broke out of our ascending triangle and came quite close to our target and closed pretty solid. Immediate resistance is in the $30.90 area.I'm curious about USO here. Basing around support ($27.73), got rejected from it's 10-EMA in a narrow range on ever larger volume. While our stochastic takes on a Head & Shoulders pattern with the neckline threatening a breach soon.

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