30d:30m
-On the left you see a green shaded area which was the Micro Trend: Ranging. In ranging cycles it is applicable to take trend reversal shorts and trend reversal longs near the top and bottom of the range on the intraday timeframe. You want to avoid the mid range as much as possible and never long at the top and short at the bottom. Once we breakout of that area we enter the new phase of the market called a Micro Uptrend. This breakout lead to consistent Higher Highs and Higher Lows for a full 7 sessions straight. During a Micro Uptrend we look for trend reversal longs mostly and trading in the long momentum of the market. We hold a nice uptrend (Green line) for those full 7 sessions then we make a Lower High and fail creating a downtrend. This is where things get tricky with classification. If we want to still consider this a Micro Uptrend then why are we now breaking the uptrend and creating Lower Highs and Lower Lows? We could possible use this as a chance to make another classification of the Micro Uptrend. We can put it in "pullback" or "pullup" stage where we still want to hold KEY levels for the full Micro timeframe picture but for certain moments we can also find some serious sellside momentum to the downside even in a Micro Uptrend.
- This is a clear picture of the new concept that I will try to implement into my trading. So we have multiple things going on here. Firstly, every part of this full picture is a Micro Uptrend. The Micro Uptrend is characterized by key level Higher Low holds and Higher Highs. The Gold areas on the chart at there to show the true Higher Lows where IF they are broken then the FUNDAMENTAL strucutre of the Micro Uptrend is BROKEN and now we must re-evaluate the chart. In this example we clearly have held all of the key level higher lows which means UPTREND is still the Micro Trend. The RED areas on the chart symbolize pullbacks in the Micro Uptrend. You can see the market clearly makes there lower highs and lower lows even in a Micro Uptrend but as long as the key higher lows are held then the uptrend is still valid in Micro Timeframe. In these red areas we must realize that we are daytraders and we can capitalize on the momentum to the downside. The first pullback was very vicious and dropped the SPY a full 12 points from top to bottom. That first big red day was a very nice trade to hold IF we broke the green uptrending line. We did exactly that and for that reason we started to make consistent lower highs and lower lows. Eventually we held the key higher low and moved back up but there was very good money to be made short in that scenario. The second red pullback zone was weaker to the sell side but nontheless we made even more lower highs and lower lows to possibly trade. The real edge comes from taking the true momentum:
Trend Reversal Longs
The second and third green zones in the chart above are where the true money is made. You could buy, add, and hold all day into MASSIVE upward moves. The second push higher was legitimately 2 back to back 7 point days. That is insane momentum and if properly traded we should capitalize on these moves and often as possible. They are what we call Easy Money. When we make these red pullback zones ALWAYS have trends drawn and be ready for the break of those trends to the upside and then breakouts of previous lower highs formed in that pullback. IF key levels are held (gold) and we break a pullback downtrend that has a good angle (close to 45 degree) then we should be trading to hold. On the second pullback example we must be ready for trend reversal longs to always trade because you can see that the pullback is not as strong as the previous pullback and it all happened overnight? When we wake up and the market moves down 7 points during non trading hours, that is not nearly enough volume for the market to drop that much. The market should try to gap fill and possibly just use this opportunity to create a new Micro Higher low and hold a previous key level. This is exactly what it did and on the day it occurred we had a BEAUTIFUL trend reversal long trade that I completely missed. I did follow the trend and shorted at the open and it worked nicely but there was a way better trade once I was finished and that was Micro Trend Continuation Intraday Trend Reversal Long. Below is a snippet of my post from my Daily Report Card (DRC) from that day of trading.
1d:3m (Trend Reversal Long) (Third Key Level to Hold in Chart Above)
-Right here we have a PERFECT example of a trend reversal long continuation setup. So at the bottom there we break the downtrend on the day. Once we break that downtrend we are also breaking the 21 moving average which is the white line. Then we pull back to the trendline break area and the 21 and 8 cross. This is a PERFECT entry point for a reversal. Moments later the 21 and the 50 cross which indicates even more upside potential. There were multiple scalp opportunities during this move higher and they were very clean and had very nice risk. I need to make sure when i see the crossing of the moving averages I am ready to take more trades because this trend was hard to trust. There was only one other thing going on that couldve helped me trust this trend reversal long trade and that is the Micro timeframe.
- I write in this post above from my DRC above how this long trend reversal was beautiful once we broke the trend, pulled back into trendbreak zone, crossed the 21 and 8, broke vwap, crossed the 21 and 50, massive squeeze and extreemly strong continuation the entire day. Absolutely wild.
Here is a snippet of a Post I made about the Continuation of the move once the Reversal happened:
- The Trend Continuation is the section that matters for this post. Once the reversal occurred then we can look for upward trend breaks that we can enter on and risk the previous higher low. The green arrows show this. The first example we can buy at the 21 test (white line) which coincides with the pullback trendline and then risk the higher low with a reward at a new higher high. In the future it can be more lucrative to hold maybe a 1 contract partial because it moves so much higher. It is probably smarter to get in and hold until at least the 8 has been tapped again. Its tricky though because this morning on the downtrend lower it crossed the 8 many times and faked out moves to the upside. I think in general if you get very extended from the 8 then its okay to sell but if you are just slowly riding it higher then its okay to hold.
