Video 48 G & H: Trading the Middle of the Day Flashcards
The 3 possible behaviors of a market cycle are:
Bull Trend
Bear Trend
Trading Range
Most days chance behavior after ____ hours
1-3 hours
After 1-3 hours, the market changes behavior, then within 1-2 hors of close, market changes behavior again.
Traders always need to be ready to change how they are trading
You have to be prepared for the transition, then trade appropriately
Is the trend so strong that it is unsustainable?
Is it climactic and likely to end?
Consecutive Sell Climaxes
When you get an II after consecutive sell climaxes, it often becomes a final flag.
Most days that begin with a trend have a ___________ in the middle of the day
Trading Range
Will the Trend on Open continue all day?
In this example:
Weak bull trend on open
No consecutive big bull bars closing on high
Probable bull leg in Trading Range
Not big bear bars, small pullbacks
Because of gaps it cold be a small pullback bull trend day. One of strongest trends and can last all day.
This weak trend led to a trading range the rest of the day.
In this example, the gap was important for price to trend down
When trend turns into a tight range, very disappointing
One of the important functions of the middle 3rd of the day is to test some type _________________ and ______________.
Support and Resistance
The reaction up or down from that test often leads to a trend in the final third of the day.
Any type of support or resistance can be the important magnet of the day. This includes prior highs and lows, trend lines and measured move target.
Measured Move
A lot of the times the high of the day will be a ______________ up from the low of the the day to the open (Bull).
Measured Move
or the low and high (tails)
Here, it reversed up from low of day and earlier low, closing at the open and high of day.
