Spotting Trend Reversals Using Candlesticks

[Spotting Trend Reversals Using Candlesticks]

I use trend reversals with candlesticks on the YM. What works best for me is a 3 min chart and use either double bottoms/tops and engulfments. I use the MACD and volume. MACD shows me where the trend is. My trades are ususally on the macd cross. It's a 3-bar method. The first bar is the base, the 2nd bar is the signal and the 3rd bar is the profit bar.

 

Hi, would you please tell me how to use the 3 bar?

Thanks a lot

[Divergence Strategy- Discussion]

Hi,

 

This thread will serve the purpose of discussion for live signals posted in Divergence Trading Strategy- Advanced.

 

I have mentioned all of this before... but I understand the main thread is messed up so here is the recap.

Internal Relative Strength is defined as the price of a stock compared to it's prices n days back. For example if the stock is trading above it's range over last 10 days, it is relatively stronger than a stock which is trading in the middle of it's past 10 days range. It is measured by RSI, Stochastics, Aroon, ADX etc. This strategy uses RSI(10).

 

Negative Divergence: Is defined as the decrease in internal relative strength of a stock, while the price apparently increases.

Positive Divergence: Is defines as the increase in internal relative strength of a stock, while the price apparently decreases.

Support/Resistance: Any of the popular anchor points like recent pivot high(low), open price of day, high(low) of day, confluence of pivots levels on shorter time frame.

 

Example Charts:

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced-10.html#post133963

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced-10.html#post133966

http://www.traderslaboratory.com/forums/technical-analysis/11438-divergence-trading-strategy-advanced.html

 

Important: Please make sure you are familiar with Concepts in Technical Analysis before reading further.

 

Strategy rules: All trades are taken on daily, for convenient discussion. I will automate posting of intraday trade signals via twitter API when the strategy itself is 100% automated.

Signal: A signal is generated when a positive/negative divergence is seen.

Prevalent Trend: Is determined by the same oscillator used for generating divergence signals. See here on determining trend using RSI.

Entry: Once a signal is generated, look for an entry for next 10 bars or so, until the price movement confirms the direction of signal. Trades are executed when the stock touches/breaks the nearest supp/ress.

Exit/Stop: Depends upon stock's volatility and how stronger the prevalent trend is. For example stops will be tighter in range-bound market vs. when the trend greatly favors your position

Strength: Enter fast and Exit fast, once in a position, hold as long your minimum risk/reward is maintained AND the prevalent trend favors your position. For example, I exited many positions within couple of days because stop was hit; holding SLB since 7/12 (currently ninth day) because its trend favors my position.

Costliest Mistake: Do not buy after big gap up, and do not short after big gap down. Similarly in intraday do not buy (short) after a spike up (down).

 

See attached charts for current running trade on FLS.

 

Many members were confused by what the strategy actually does, because the original thread was flooded by opinions from other 'professional' with apparently 'superior' trading strategies. The fact that these members never posted live trades/signals is left upon the readers to decide about their credibility.

 

Do or Die: I just love your posts, thank you so much , I really do.

[Discussions of MACD Usage]

(3,10,16) ,the best MACD setup i have found after having tried atleast half a dozen setups...you just need to w8 1 day after the MACD crossover to realize if the reversal or swing is actual or not.....works on the daily charts and very good for doing swings...

 

Thanks for sharing it.

can you tell me what w8 stands for?

Thanks