Tuesday, April 3, 2012

Early strength indicates strength late in the day

When a day breaks into a trend (b18-62) and presents a reversal signal (b63), you need an assessment of the chances of success and a possible swing add-on. Will this attempt only go to the ema? Will it fail after a couple of weak attempts to go up and continue the slide down?

There are a few indications you can use to make such assessments. First of all, was there a trendline break? (b33-b54). If not, the chances of a successful reversal are probably low. The trend could terminate and move horizontally, but a trendline break greatly adds to the chances of a successful reversal.

The second thing you need is a Wedge (b33,57,63) with a strong signal bar (b63) or a successful test of the swing point that led to the trendline break (b33).

To swing your position, you need indications of strength early in the day (b5-10,b11-15). If there was no early strength, its unlikely that your move will get too far. (It does happen, but is rare).


  1. Cad, is b18 an XT, fBO? if yes, may I know why you didn't take the trade.


    1. That's correct. Unfortunately, I was unable to read it correctly on time.