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.

Tuesday, August 16, 2011

As you can gather from charts posted on this blog I use two time frames for trade considerations; one which determines a setup criteria and a faster one which triggers an entry.  Typically I use the 15- & 5-minute time frames, but I also like to gauge what higher time frames might be setting up for (see yesterday's post), especially the Daily chart.
So, here we have the SPY daily chart split with a 130 minute chart (there are 3 130-minute bars in a Daily bar, just as there are 3 5-minute bars in a 15-minute bar, preferences are your own).  The reasoning behind this is that the faster time frame can help me to enter in anticipation of what I am looking for the higher time frame to do.
For instance; in the chart below the daily (left) set up a 2b short entry back in July, but in order to anticipate this trigger you can look to the faster time frame where the histogram turning red triggered an early entry as it was hinting at price weakness (vertical red dash line on the 130-min chart).

 So, what we have in the current scenario is a pullback of the previous momentum.  Out of this pullback we typically look for (anticipate) a re-test of the lows (which can often form a momentum buy divergence).  We're essentially looking for the faster time frame to turn red, leading us into the triggered continuation move lower.
Keep in mind, this is OpEx week and just because a trade may trigger an entry doesn't mean you shouldn't be suspicious should price fail to move in your direction within a reasonable period of time.
Meanwhile, here are some that triggered at the close today, so we would be looking for a continuation move of some sort.
IYT - failed overhead gap fill looks weak, may look to re-test $79 area
SMH -trigger bar is a re-test of the bearish momentum bar that precedes it- possible move back to $28.25
XLF - Barely turned red but hasn't exactly caught a bid. 
Remember, these are triggers to setups, and anything can happen so manage your risk.  They are also based on a time frame which is more in line with holding times of longer than one day.

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