Just a note on how I anticipate the setups I look for. The benefit of using multiple time frames (in a top-down approach) is that it can also act as a timing mechanism so that you don't rashly jump in too soon.
So, I'll break it down using the current SPY and the Daily time frame as our focus.
A. Is the Daily chart with the 3/10macd. IF we are anticipating the fast line to tick up (indicating further upside) we can look at the faster time frames for clues as to when to possible act on a buy setup.
B. Is a 130min chart, simply because you can divide the 390-minutes in the Regular Trading Hours evenly, so that you end up with three 130-minute bars per day. You can simply go to an hourly (65min) chart if that is your preference.
C. A 39-min chart because, again, it divides evenly and is the closest we can get to one-third of 130minutes.
D. A 15-min chart, though you can use a 13-min chart to make it precisely one-third of the 39-min chart, but I prefer 15.
So, the anticipation is for the fast line to tick up on "A".
You would like to see the fast line turn positive on "B", which would mean you would like to see
the fast line turn positive (green), pull back, then tick positive again on "C", which would mean
the 3/10macd on the 15min should begin working itself in a positive orientation, for starters getting the slow line back to positive.
Described above is a potential sequence, not necessarily exactly how it will play out. For example, in chart "C", rather then get a pullback in the fast line in could just continue pressing higher until it pulls the slow line positive.
As far as anticipating the fast line in "A" to go negative, we would be looking for a flag or channel to form on "B" and we might see the 130min fast line pull higher and then tick back down (the reverse of the bullish example given in "C"). We would also probably wait for the fast line on "C" to work off some oversold condition then cross back bearish with the Slow Line.
So, as time progresses I'll update this chart to see how it played out.
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 firstname.lastname@example.org
I am always open to questions, comments, or suggestions on how to improve this blog.