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
I am always open to questions, comments, or suggestions on how to improve this blog.

Thursday, July 7, 2011

higher time frame

I use two time frames to trade.  One time frame which I make trading decisions off of based on anticipated setups and a faster time frame used to time entries (all covered in the document in the sidebar 3/10MACD Trading).  So, I thought I would take a look at how you may have used the weekly & daily charts to trade a longer term positions these past few months.
Coming into our recent sell-off in the SPY we had a previous swing low being tested, leading to a higher low on a lower momentum reading (reverse divergence).  This condition wasn't technically triggered until after the weekly bar's close when it was all but too late, which is why I use a faster time frame to act on the anticipation of such events (though I'll have you know I failed to anticipate this setup).
So, while the weekly chart was showing strong downside momentum all the while the previous swing low was still intact, our daily chart was showing a multi-swing divergence of its own at these lows (lower price lows on higher momentum lows). 

Take a closer look at the daily chart and what price and momentum were telling us.
 All very easy in hindsight, but a very mechanical approach is what allows one to ignore news/message boards, etc.
Now take a look at some previous swing type setups that occurred over these past few months.  Using the weekly chart to alert you to a criteria and the daily chart to time an entry.
2b short setup (what's a "2b setup"?) on the weekly (left), timed entry on the daily (right) chart

and my favorite, 3d setup on the weekly going back to March '09 and the timed entry on the daily

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