Monday, March 21, 2011

TTR trend terminations



Trends can terminate into a TTR after a large move up and this includes large gaps. A TTR that slopes up after a pullback will often make a double top or nominal HH or LH. If on the other hand a TTR slopes down from the high of the day, then it may make a two legged or three legged move near the high of the day and then move down.

BW early in the day as we saw near b6 is often an early sign of TTRs and soft trends and one should take trades very carefully. Once the TTR has terminated the trend, the next move is to wait for a trend breakout such as expanding triangles or DP. Any two legged move can be traded if the range is large enough. Today the range was barely 5 or six points so you would risk about 2 points to essentially make 2 points or less. Normally, its best to avoid trading at this point.

A huge gap up day that does not go anywhere is often a consolidation and a gap on the next day is likely to  extend the gap and turn into a trend day.  

2 comments:

  1. TTR and BW not in the glossary unless I missed it.

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  2. TTR: Tight Trading Range

    BW: Barb Wire

    ReplyDelete