Now I will add another ingredient to our aproach...
Market moves in cycles, its like breathing... you load your lungs with air, and at certain point its inevitable, you will be releasing air from your lungs... same with market he makes small cycles inside biger cycles and so on...
You can choose wich cyles you want to trade, will they be little, medium, large ones... any of them... for that I am a believer that Oscillators help us to see the detrended presentation of cycles... cycles get plotted very easy on an oscillator... and even better if its a Chimp Oscillator ¡¡
Some people developed alergy to oscillators, thats because they wanted to use them on the wrong aplication... for example, an oscillator will not show you so good a trend definition as we have with vma`s on our price pane... but YES they will clearly show you the market breathing (cycles)... as the market comes and goes... being able to detect where the next move will be is very important.. and oscillators can help us a lot on this...
here we have the complete 5 min chart for this aproach, it has the three lines above and a chimp2-1 oscillator with inputs 2.5-2-1-2 and he has a gentle signal line wich is a sma 4 of the chimp oscillator...
This indicators had been developed by Bruce (Pyenner) on this thread
http://www.traderslaboratory.com/for...n-2440-40.html for wich I am so greatfull ¡¡
What the oscillator is clearly showing, with very small noise and at the same time on a quite leading way, is the points of inflection from a certain measure of cycles on the market...
I can put a smaller setting and you will probably see the smaller cycles inside this first ones... true is if I create a 1 hour chart and I put this same oscillator, he will show me the bigger cycles that would contain this ones...
But madness its not necesary for trading... we need to keep things simple and we need the exact correct information to get us trading, no more, no less...
So this chimp oscillator will show us the cycles we want to trade...
on the next post let me explain where do cycles fit with market inflections and how inflections happen to be in a centrifugal or centripetal context.. ahahaah... cheers The Chimp.