How to find short-term upside reversals
Today’s Chart of the Day comes from the TradingMarkets
Long Windows Candidates list.
These are stocks
which are in a strong uptrend, as determined by a proprietary trend filter and
whose current bar has its highs below the 4-day
moving average.
Historically, these stock on average have had a larger than normal short-term
upside reversals. In order for us to be a buyer of a "Trading Window", we must
have a 10-period ADX reading of 30 or higher and a +DI reading above the -DI
reading. Or we must have a 14-period +DI of 30 or higher (with no ADX reading
required). In order for us to have a sell signal, the 10-period ADX must be 30
or higher and the -DI must be greater than the +DI. Or we must have a 14-period
-DI reading of above 30 (with no ADX reading required). "Single Windows" are the
most common type of Windows. They are simply a single bar which has its low
trading above the 4-period MA or its high of the day below the 4-period MA. You
will enter tomorrow if the market trades above today’s high (for buys) or below
today’s low (for sells).
C.H. Robinson Worldwide
(
CHRW |
Quote |
Chart |
News |
PowerRating)
1. Today’s high is below the 4-day MA.
2. The 10-day ADX (green line) is above 30.
3. The +DI (blue line) is above the -DI (red line).
Ashton Dorkins
Editor-in-Chief
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding. Controlling risk through the use of protective stops is critical.