Tape Reading II Is price acting in accord with your game plan? When price is behaving as you expect, step up to the plate quickly and become more aggressive. There is a lot of noise on the tape, so do not watch so closely that you miss the forest for the trees. Look for confirmation […]

Tape Reading Tape reading long ago referred to the practice of studying an old-fashioned ticker tape and monitoring price-volume fluctuations in order to predict the immediate trend. Tape reading is nothing more than watching the current price-volume action in order to determine whether buyers or sellers are in control. Which is greater…supply or demand? Even […]

Making Sausage Ninety-nine percent of this game is fifty percent mental. Yogi Berra Every time I take a sizable drawdown, I ask “Why?”. Reasons vary, but there is one mistake I am prone to make again and again. Plunging. Plunge: To enter quickly and forcibly; to pitch or throw oneself violently forward, hence, to act […]

Trendline Triggers Buying Bottoms How does the perfect bottom form? Here’s what to look for: 1) Selling Climax After a prolonged downtrend, downside price movement accelerates and volume expands significantly. Daily spread from high to low widens. The period of heaviest volume produces an extreme low. 2) Automatic rally After a selling climax, the market […]

Gauging The Trend 2 Keltner Channels, when combined with oscillators and other technicals to identify cycle tops and bottoms, are an excellent analytical trading tool to determine support and resistance levels in trending markets either in the Keltner Channel itself, or the midline that runs through the middle of the chart. They are also used […]

Gauging The Trend 1 Since the trend is the direction of the next longer dominant cycle than the one you are trading, the beginning of an uptrend is often confirmed by a buy signal in the next longer time frame. In the weekly chart at the two lows indicated by W, the direction of trend […]

Trade With The Trend But the key to trading any market in any time frame is TREND. If the trend is up, buy the dips (cycle bottoms); if the trend is down, sell the rallies (cycle tops). Easy to say, but how do you know what the trend is? And how do you know when […]

Timing Bands The chart below shows cycle timing bands that forecast time periods for cycle tops and bottoms with 70% accuracy. Knowing that a cycle is most likely to top or bottom in a timing band allows you to wait for a buy or sell signal to occur when prices are in a timing band. […]

Cycles Within Cycles The key to trading with cycles is an understanding of the interplay of cycles within cycles. Almost all trading cycles have a ½ trading cycle (see following illustration). A 20-day (bar) trading cycle has within it two 10-day (bar) cycles. One 10-day cycle begins as the 20-day cycle begins and bottoms halfway […]

Trading Signals RSI (Relative Strength Indicator) is a powerful oscillator which can be used to identify cycle highs and lows (to review RSI, see Basic Training: Overbought/Oversold Indicators 1). I have found that for most markets, a three-day RSI smoothed by a three-day average (RSI3M3) works very well. There are four steps to construct a […]