Trading Symmetry, Sequence and Probability
The SPX made a 7/3 pre-holiday marked up new cycle high at 1985.59, followed by a decline to 1952.86 last Thursday, which was accelerated by the Portugal Bank nonsense relative to the US market.
However, it provided intraday, an extended volatility trading opportunity relative to the significant SPX discounted NYSE opening, and this commentary will review some different examples of day trading symmetry that increase the probability of positive trades.
The SPX made a 1952.91 low on July 10 on the 9:50 AM bar with a positive 5-period RSI divergence, as indicated on the chart, versus the -2.0 VB at 1953.71 and the 20DEMA at 1958.95. It was an Outside signal bar and entry taken above 1955.47, followed by an advance to 1969.84. In this case, the trade was exited below 1965.44 followed by the 1966.21 high at the 816EMA.
The SPX reversal had extended volatility band symmetry on the 5 minute chart and it was also a 4-day pullback to the daily chart 20DEMA, which is obviously a momentum based [Fed Ponzi Scheme] Above-the-Line [ATL] index. You also took the trade because it was a BS discount opening on the Portugal nonsense.
On the next trading day, July 11, the SPX made a 1959.63 low on the 9:45 AM bar which had symmetry with the 1959.35 .618RT to the 1952.86 low and the 20DEMA at 1959.77. The trade taken above 1960.69 ran to 1965.52, and then the trade was stopped out for a profit on a trailing stop following the reversal.
The second defined opportunity in the SPX on July 11 was a 13 bar narrow range B/O above 1962.60, which was also a Flag B/O, and it ran to a 1968.67 before closing at 1967.57. These are just two recent examples of defined symmetry that are utilized in my Trading Service which can be viewed with a free 1-week trial subscription on the TradingMarkets.com.
In my trading course, I outline the 123-Higher Bottom, Double Bottom, and 123 Lower Bottom strategies which are for trading in any time periods. In the following example of NOV, which is a trading service Focus stock, you see the 123 Lower Bottom on a 5 minute chart, which is the primary day trading period I use. The 123 is a consistent and basic trading pattern when used in conjunction with other symmetry which increases to probability of success.
NOV had just B/O of a trading range on 6/20 to new cycle highs, and two trading days later on June 24, it pulled back from a B/O 80.92 high to 79.40 The next day, June 25, it made an opening period 80 high and pulled back the outside signal bar low at 79.28.
The 123-LB set up after the stock broke its logical down trend line as it made the 80 high, and then took out the 79.40 low at 79.28 right above the 480EMA. The outside bar reversal entry to the 80.80 zone with the +2.0 VB at 81.02.
All trades are obviously not winners, but the purpose of these examples is to highlight day trading symmetry, defined sequence, and the increased probability which will benefit any trader.
Kevin Haggerty