How to trade early trend reversals

March 30, 2006
Jea Yu

Jea Yu has been involved with the equities markets for over 10-years. He
specializes with intraday trading in the U.S. equities and futures markets.
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click here or call 888.484.8220 ext. 1.

Uptrends are defined as higher highs and higher lows on a
chart. With my methods, I like to actually QUANTIFY the value of those higher
highs and lows by using the 5 and 15 period simple moving averages. The rule
with playing uptrends is to step in on the pullbacks to the 5 period moving
averages. However, when the 5 period moving averages break, then we watch the
stochastics to see if they slip the 80 bands or even better form mini inverse
pups for a tightening target to the 15 period moving averages and lower
Bollinger bands.

(
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PowerRating) was a trade we hit this morning. We finally nailed the uptrend
reversals when the 3/8 min took mini inverse pup lean downs. Dual mini inv pups
are strong formations to consider taking on the short side. The nice thing is
that the 5 period moving averages are the key resistances. The initial shorts at
62.75 was a rejection off the 8 min 5s with mini inverse pups and then the next
short at 62.15 was off the 3 min 5 rejections on the mini inverse pups.