HAPPY BIRTHDAY!

March 9, 2009 was our last major bottom, marking the birth of the current bullish trend.  As with many two years old, this youth wobbled around the EMA most of the day.  On days like this, it is important to view the trio of charts closely for key setups.  Our primary focus is on MAXT, XRB, TR, and TRT's.

XRB and TR are reversals with varying strength.  Technically, in a bullish trend XR would be above the ema, and TR would be below, and vise-versa for a bearish trend.  For consistency and clarity, we will always report XRB above the ema, and TR below the ema.

Another focus point is price action (PA) that is trading within or very close to a cluster of MA's ( CMA).  Essentially, PA  seems to be able to break a MA, then move to a higher level MA and stall.  As an example, PA breaks the 20 ema and stalls at the 50 or 200.  Frequently we see a clustering of MA's, which is saying the PA has been moving in a narrow sideways (S/W)  range or channel.  The various MA's cluster creating the effect of a single MA.  PA that breaks this cluster tends to be bold, extended and are a highly desirable trade.

TODAY'S ACTION:  open setups

+X  on a trade is nice, and it is "the what" that keeps a trader a trader!.  However, before the "what"  the trader needs a plan for addressing  the "where and how" of trading.  Why is self-evident.

Entries should be based upon a clear understanding of your trading plan, which includes your parameters and risk.  The focus is upon those trades, historically, that have produced positive results.  The whole purpose of practice is to determine what you are good at.  Real money trading without practice will determine you are good at loosing money!

The above chart has been marked with the key points we are interested in (maxt, xrb, etc.).  As stated previously, the preference is for a trio chart system.  Trading can be a setup found on any of the charts: trade all three, two, or use one.  It is always a personal preference.

Our preference is for  a global chart as opposed to the rth.  We were in a clear down trend with multiple MAXT shorts at the ema.  The range chart shows a cluster of bars (b6-8) setting up a trend reversal (TR).  With a +4 to the ema, it is a valid trade, and could be followed by a more conservative entry at the trend reversal test (TRT) holding until an XRB setup develops.  Similar entries can be seen on the 8m and 3m charts. 

 One advantage of a multi-chart look is cross confirmation (CC).  A set up pattern on two (or three) charts is very strong.  When seen, the lesser time frame can be used to pursue a better price for your entry.

This  TR-XRB trading pattern continued until mid day.

Normally we do not trade the mid day action.  However, the 3m chart was actually very tradable showing a down channel.

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