ER2 and the 34ema

[momentom]

I've been trading the 34ema bounce for a couple of years now. I use tick or volume charts. I've even automated it for TradeStation but the fills have too much slippage and TS gets out of sync easily due to the number of trades a day. It works better trading it with an oscillator that gets over bought or oversold as well as the steepness of the angle of the ema.

[TinGull]

Very interesting momentom! You should stop by the trading room sometime. We meet there every morning. Would love to talk about ER trading with you some more.

Take care,
Chris

[walterw]

The angle of 34 ema is being thougt by woodie and gb007 at woodiescciclub... now what happens some times is that this angle gets flat during the exact pullback (test) and then it becomes steep again as it continues the trend to evolve... one thing I like is to put both 34 and 50 emas and if they are enough apart one from each other it means good momentum... some other tecnique I use to take the trade is using a 1/5 scale chart (ej: 233T / 47T )(Drummond concepts) and use some average croosovers on the smaller time frame where I can see more decompressed data to take the exact spot for the trade, If you only look at the 233T chart its hard to find the best spot on so compressed data, and it makes dificult to establish a competitive stop... I attach example of both scales working.... cheers Walter.

[walterw]

I add another example on the scales 110T / 22T it seems like there is more amount of opportunities on this timeframe.... also stops are not that far away... thought objectives are also smaller...

Thanks Tingull for inspiration... you are good generous people...

cheers Walter.

[TinGull]

You certainly bring up some interesting points Walter...ones that I'll definitely look into further You're welcome, and thanks MrPaul for the 34ema trick, and thanks Walter for more insight

[momentom]

Guys, when measuring the ema angle a la woodie, I look at the angle 3 bars before the bounce due to the fact, as walterw rightly points out, the ema flattens on the pullback.

The countertrade when the price is far from the ema is also a very good trade when filtered by an oscillator to show overbought/sold condition. The CCI is perfect for this. Try the 50 CCI, not shorter.

[TinGull]

The thing I look for is a divergence in the delta of the bid/ask going into the 34ema, especially at or very close to Market Profile levels. It also can give you a good exit point on a scalp. ER seems to love MP levels too.

The first pic is a real quicky on what to do without too much MP levels to play off of. You can see rejection inside of value from Friday as we exit value area and bounce back up to the 34ema with a huge divergence. (dont mind the s3 level...my charts daily pivots were messed up friday). As we get the confluence of the 34ema, val, and weekly S1 AND divergence...sweet. Good trade placement would've been right under the 34 as we came back down, just to make sure we were headin' in that direction. A few bars later we get another entry if you missed the first one. Good for a 1-2 point scalp, and then another divergence/34ema entry good for another 1-2 point scalp.

The second pic is of a great trade of the ER being accepted inside of value. There's 2 opportunities to get into this trade at VAL. Both show divergences on the delta graph meaning selling is decreasing as price still wants to move lower. Coming into value area low with divergence AND a market profile level is sweet. As you can see...good for 3 points bottom to top. At around 13:56 you had another entry exactly the same play from VAL to the daily pivot. While one might be tempted to flip the trade there from a triple top...I'm not that brazen. I want to wait for the next 34ema/MP move. at 14:57 price starts showing us acceptance out of value. We blast back up to VAL with a divergence AND the 34ema....sweetness again. From there we ride down to the weekly pivot. A little over 3 points top to bottom. So...this day showed us 9 points using Market Profile and the 34ema.

The red trendline is a 5ema. I use it to see how choppy things might be. When it hangs around the 34 for too long, I dont want to take trades until we see some movement away from the 34 and back to it. Just to play it safe.

[walterw]

Great stuff Tingull ¡¡ one thing I will like to call your atention worth more analisis is on the fact that when you are at the 34 ema area ready to get a reject trade there are clear M `s and W`s patterns being formed.... sounds like market needs to do this types of "come and go" before rejecting the 34 ema... this delta indicator you use, shows it very clear... would be nice if we could understand why does the market do this and exploid the best spot to make an entry on this pattern too... I attach some examples on this pattern... cheers Walter.

[TinGull]

Once again Walter, thanks! Cool that you're name begins with a "W" eh? Just thought of that....hehe

As for the delta, since it's just showing the net difference between the bid and the ask contracts going into the market, it's pretty easy to grasp whats happening. As we head into a critical area (be it the 34ema, a market profile level or whatever) the contracts going in the movement of price start decreasing. If price is heading up, the net buying contracts starts going down. This is just signaling that the bulls lack confidence into that move and you can exploit that.

Happy trading

[walterw]

Oh yes Tingull W is in all parts of nature jejejejeje its like fibonacci numbers ¡¡¡
trade well... cheers Walter.