Look Out For The Numbers 8 And 10
Many of you have
probably heard horror stories about how traders have lost big money
by trying to bottom fish. Also, you must have heard this expression: “Don’t
try to catch a falling knife.” It is human nature. We want to buy at the
lowest price and sell at the top. Obviously, the problem is we don’t know how to
do that. Well, I want to show you one method that warns you of the potential top
or the bottom.
The chart below is a five-minute chart of the NASDAQ 100 Index. Counting from
the opening, the low happened at the tenth lower low bar at 10:30 am. A swing
low at 3:45 p.m. happened on the eighth lower low bar counting from the 2:50 p.m.
top. So often, the price reverses after 8 or 10 lower lows are set. Of course,
the similar principle applies to the upside. A top tends to form after 8 or 10
higher highs are made.
Try it, but don’t forget to place stops on every trade.
Have a great weekend,