Trading Setup Tutorials : "Relative Strength Indicator (RSI) Intraday Trading"

INTRADAY TRADING STRATEGY USING RELATIVE STRENGTH INDICATOR (RSI)

J. Welles Wilder is a giant in the field of technical analysis. In “New Concepts in Technical Trading Systems”, he introduced an array of trading indicators. Now, these indicators are among the most popular. And one of them is the Relative Strength Indicator (RSI).

The default RSI setting of 14 periods works well for swing traders. But many intraday traders find it lacking because it produces infrequent trading signals.

Some traders deal with this problem by lowering their time-frame. Others lower the RSI period setting to get a more sensitive oscillator. However, these solutions produce RSI signals that are more unreliable.

Getting infrequent trades is not always a problem for intraday trading. That is if the few trading setups that show up are high-quality ones.

The idea is to combine the default 14-period RSI with support/resistance zones. Our aim is to find intraday reversal setups with a high reward-to-risk ratio.

Trading Setup Tutorials : "Trend Line Trading"

TRADING STRATEGIES FOR THE TREND LINE TRADERS

Price action traders can’t do without their trend lines. Trend lines are practical tools for tracking and trading trends. It makes sense to form trading strategies with this simple but effective tool.

Many traders who seem to trade with a blank chart have in fact internalized the art of trend line drawing. They are able to visualize the trend lines with actually drawing them.

Trend lines track trends. And when it comes to trading trends, you can go for retracements or reversals. Basically, you can work on the premise that the trend will continue or reverse.

The 4 trading strategies below are classified with this understanding:

• Trend Line Bounce – Aggressive Retracement.
• Minor Trend Line Break – Conservative Retracement.
• Major Trend Line Break – Aggressive Reversal.
• Major Trend Line Break and Retest – Conservative Reversal.

Here are the 4 trading strategies in detail.

Trading Setup Tutorials : "INSIDE DAY NR4 (ID/NR4)"

INSIDE DAY NR4 (ID/NR4) TRADE SETUP

Toby Crabel did some serious work on volatility patterns in price movement. The Inside Day/NR4 (ID/NR4) is one of the patterns he wrote in “Day Trading with Short Term Price Patterns and Opening Range Breakout“.

An inside day is one with a lower high and higher low than the previous bar. NR4 is a bar with the narrowest range among the last 4 bars.

Hence, ID/NR4 is an objective criterion for identifying days of decreased range and volatility.

Once an ID/NR4 is found, we trade the breakout as volatility resumes.

TRADING RULES FOR ID/NR4

RULES FOR LONG

1.    An inside bar with the smallest range among the last 4 bars.

2.   Place buy stop order above the high of the bar.

3.   Wait for break-out to trigger order.

RULES FOR SHORT

1.    An inside bar with the smallest range among the last 4 bars.

2.   Place sell stop order below the low of the bar.

3.   Wait for break-out to trigger order.

Trading Setup Tutorials : "Two-Legged Pullback to Moving Average"

Two-Legged Pullback to Moving Average (M2B, M2S)

Many price action traders claim that two-legged pullbacks are the most reliable trade setups. The variant we are reviewing today is from Al Brooks, who wrote three tomes on price action trading. These three books are not an easy read, but are extremely informative for price action traders.

In his books, he identified a two-legged pullback to the moving average as one of the best trade setups when there is a strong trend.

Before we start, let’s have a basic explanation of counting legs. Any bar that goes higher than the previous bar starts a new leg up. Any bar that goes lower than the previous bar starts a new leg down.

Trading Setup Tutorials : "9/30 TRADING SETUP"

9/30 TRADING SETUP

This trading setup uses two moving averages: the 9-period exponential moving average (EMA) and the 30-period weighted moving average (WMA).

LONG SETUP

1.   9 EMA above 30 WMA.

2.   Close below 9 EMA (More conservatively, entire bar below 9 EMA).

3.   Place buy stop order above the high of the bar that closes below 9 EMA.

SHORT SETUP

1.   9 EMA below the 30 WMA.

2.   Close above 9 EMA (More conservatively, entire bar above 9 EMA).

3.   Place sell stop order below the low of the bar that closes above 9 EMA.

Trading Setup Tutorials : "Andrew's Pitchfork Trading Strategy"

Andrew’s Pitchfork Trading Strategy

Alan Andrew’s Pitchfork is catchy. It catches your attention with its unusual name and its striking pitchfork appearance. It also catches trends with a channel.

Essentially, Andrew’s Pitchfork is a tool for drawing price channels. While two lines surrounding price are usually enough to draw a channel, the Pitchfork has an extra line. It is the median line or the handle of the Pitchfork.

The median line is central to this trading method. This is why Andrew’s Pitchfork is also known as the Median Line Method.

HOW TO DRAW THE ANDREW’S PITCHFORK

There are three steps to drawing a Pitchfork.

COMEX Gold Technical Analysis

Bursting Setup – COMEX Gold

Recently we witnessed a breakout in COMEX Gold which occurred after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors.

COMEX Gold - 15 Minutes

COMEX Gold gave this breakout of nearly 20 points after breaking the Lower Price Wall of 1231.5 .

For Intraday & Positional Tutorial Calls and Detailed Technical Support, Ask The Financial Doctor

NYMEX & MCX CrudeOil Technical Analysis

Bursting Setup – NYMEX & MCX CrudeOil

Recently we witnessed a breakout in NYMEX CrudeOil which occurred after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors.

NYMEX CrudeOil - 240 Minutes

NYMEX CrudeOil gave this breakout of nearly 7 points after breaking the Upper Price Wall of 35.32 . 

MCX Silver Technical Analysis

Bursting Setup – MCX Silver

Recently we witnessed a breakout in MCX Silver which occurred after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors.

MCX Silver - 15 Minutes

MCX Silver gave this breakout of nearly 700 points after breaking the Lower Price Wall of 37472. Price Consolidated. Price Pattern was acceptable. Volume Pattern was acceptable.

For Intraday & Positional Tutorial Calls and Detailed Technical Support, Ask The Financial Doctor

MCX Gold Technical Analysis

Bursting Setup – MCX Gold

Recently we witnessed a breakout in MCX Gold which occurred after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors.

MCX Gold gave this breakout of nearly 300 points after breaking the Upper Price Wall of 29015. Price Consolidated. Price Pattern was acceptable. Volume Pattern was acceptable.

For Intraday & Positional Tutorial Calls and Detailed Technical Support, Ask The Financial Doctor

Trading Setup Tutorials : "Moving Average Channel Trade Setup"

MOVING AVERAGE CHANNEL

This day trading setup by Jake Bernstein uses a moving average channel to figure out trend and key support and resistance levels. We will build a moving average channel with a 20-period SMA of highs and lows.

Source: The Compleat Day Trader, Second Edition

RULES FOR LONG DAY TRADE

1.  Wait for two consecutive bars to move entirely above the high of the channel.

2.  Buy as price tests the 20 SMA of lows (more aggressive traders can buy on test of 20 SMA of highs).

RULES FOR SHORT DAY TRADE

1.  Wait for two consecutive bars to move entirely below the low of the channel

2.  Short as price tests the 20 SMA of highs (more aggressive traders can sell on test of 20 SMA of lows)

MCX Gold Technical Analysis

Bursting Setup – MCX Gold

This is a recent breakout example of MCX Gold. The breakout came into effect after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors. 

This is the recent example for MCX Gold-

MCX Gold - 15 Minutes

It broke the Upper Price Wall of 29365 and it has already given 300 points in Intraday in MCX Gold. Prices consolidated. Price Pattern was acceptable. Volume Pattern was acceptable. Lets see where it takes Gold from here on.

Trading Setup Tutorials : "The Sandwich Trade Setup"

The Sandwich Trade Setup

The sandwich trade is made up of multiple candles and involves an engulfing bar. It forms by the market going up or down sharply and then having multiple small bars follow it. After those small bars a bigger bar engulfs the previous small bars. This essentially forms a sandwich and you will get a better idea of what it looks like.

It can act as a reversal signal or a continuation signal depending on whether the 2nd big bar is bullish or bearish.

What a Sandwich Trade Looks Like

The diagram below shows a bullish sandwich trade, notice how the price drops sharply down then it is followed by a couple small bars. Then an engulfing bar consumes all of the small bars since the sharp price drop. This is a simple example of a sandwich trade.

Trading Setup Tutorials : "Hikkake Trade Setup"

HIKKAKE TRADE SETUP

Dan Chesler discussed this candlestick trading setup in the Active Trader Magazine in April 2004 (“Trading False Moves with the Hikkake pattern”). Hikkake means trap, trick or ensnare. This trade setup seeks to profit from false breakouts.

RULES FOR LONG HIKKAKE

1.   An inside bar.

2.  The next bar has a lower high and lower low.

3.   Place buy order at the high of the original inside bar for the next three bars.

4.   Cancel order if not triggered after three bars.

RULES FOR SHORT HIKKAKE

1.   An inside bar.

2.  The next bar has a higher high and higher low.

3.  Place sell order at the low of the original inside bar for the next three bars.

4.  Cancel order if not triggered after three bars.

Trading Setup Tutorials : "Bollinger Squeeze"

BOLLINGER SQUEEZE

Bollinger Squeeze is a trade setup by John Bollinger, using his very own Bollinger Bands.

Bollinger Bands is a channel formed by two vertically displaced moving averages: one displaced upwards by two standard deviations and one displaced downwards by two standard deviations. The typical parameters refer to a simple moving average and standard deviation based on 20 periods.

Bandwidth is the width of the Bollinger Bands. A decreasing Bandwidth shows decreasing volatility and an increasing Bandwidth shows increasing volatility. Bollinger Squeeze setup uses decreasing Bandwidth (the Squeeze) to find periods of low volatility and trades price breakouts from sluggish price action.

Trading Setup Tutorials : "Yum-Yum Continuation Pattern "

Yum-Yum Continuation Pattern

Yum-Yum continuation pattern is a delicious trading setup found in the Ultimate Trading Guide by John R.Hill, George Pruitt, and Lundy Hill. If we’re a book analyst, we would issue a “strong buy” for this book for its variety of sound price-based trading ideas.

Take a look at Yum-Yum and if you find it yummy, you might want to take a look at the book.

TRADING RULES – YUM-YUM CONTINUATION PATTERN

LONG TRADING SETUP

1.  Existing upwards trend

2.  Swing high broken with a wide-range bar that exceeds the 10-period average range

3.  Close is near the high of the bar and above the open

4.   Buy on breakout of wide range bar (within 1 to 3 bars)

SHORT TRADING SETUP

1.   Existing downwards trend

2.   Swing low broken with a wide-range bar that exceeds the 10-period average range

3.   Close is near the low of the bar and below the open

4.   Sell on breakout of wide range bar (within 1 to 3 bars)

Trading Setup Tutorials : "Trend Lines For Trading Pullbacks"

Trend Lines For Trading Pullbacks

Trend lines are amazing trading tools. Even traders who swear off indicators draw trend lines. Seasoned traders can see how price action interact with trend lines without drawing them. If you want to join their ranks, John Hill’s Trend Line Theory is an excellent place to start.

John Hill is a co-author of Ultimate Trading Guide, an excellent trading book. The Yum-Yum Continuation Pattern is also found in this book. John Hill has another lesser known book called Scientific Interpretation of Bar Charts. It is a concise manual with a chapter devoted to trading with trend lines – Trend Line Theory.

In the Trend Line Theory chapter, John Hill introduced a variety of trend line breakout setups. The basic idea is to find if each breakout is valid by considering :

• Trend
• Number of pullback swings
• Relative swing length
• Swing retracement percentage

TREND LINES AND PULLBACKS

In general, the weaker the pullback, the more likely for a trend to resume. This means that a weak pullback is worth risking our precious trading capital. On the other hand, a strong pullback is a clue that the market might reverse soon. Pullback traders should hold their reins.

With two simple trend lines, you can observe the strength of complex pullbacks. (What is complex? At least a three-legged pullback).

MCX Lead Technical Analysis

Bursting Setup – MCX Lead

Recently we witnessed a massive breakout in MCX Lead after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors.

MCX Lead  - 60 Minutes

MCX Lead has already given a breakout of nearly 7 points after breaking the Lower Price Wall of 124. Prices consolidated. Price Pattern was acceptable. Volume Pattern was acceptable. Lets see how it goes.

For Intraday & Positional Tutorial Calls and Detailed Technical Support, Ask The Financial Doctor

S&P Futures Technical Analysis

Bursting Setup – S&P Futures

Earlier in the day we have seen a Major Breakout in S&P Futures after the formation of The Bursting Setup, a breakout technique developed by The Financial Doctors.

This is a live example for S&P Futures-

S&P Futures - 240 Minutes

S&P Futures has already given this breakout of nearly 25 points in Intraday after breaking the Upper Price Wall of 1897 followed by a Bull Flag to the upside with an estimated target of 1950-1960 Area. Prices consolidated. Price Pattern was acceptable. Volume Pattern was acceptable. Lets see how it goes.

For Intraday & Positional Tutorial Calls and Detailed Technical Support, Ask The Financial Doctor

DOW Technical Analysis

Bursting Setup – DJI (Dow)

Earlier in the day we have seen a Major Breakout after the formation of The Bursting Setup in MCX Gold 11February 2016. This is yet another live example in DOW Futures. The Bursting Setup is a breakout technique developed by The Financial Doctors.

This is a live example for DOW Futures (DJI)-

DOW Futures - 240 Minutes

DOW has already given this breakout of nearly 250 points in Intraday after breaking the Lower Price Wall of 15729. Prices consolidated. Price Pattern was acceptable. Volume Pattern was acceptable. Lets see how it goes.

For Intraday & Positional Tutorial Calls and Detailed Technical Support, Ask The Financial Doctor