Dow Intraday Charts 19 Jul - 23 Jul

[tradesmart]

That's because it's yesterday's 1 min chart..........!?

(CM sometimes does this for a laugh..........!....... )









I hope.............

 

[eddyjo]

Ok I get it. lol.

 

[smarwood]

Hi Chartman.

I've been following your excellent daily thread for a while now and seem to have grasped most of your explanations. :idea:

I Picked up the ND at 10232 (over 25 mins) and went short.

However, could you explain why the 2 points i've marked on the attached chart "a" and "b" where not classed as a PD, as both where divergences of over 25 mins. as a result i closed out at point "a". then did a "gamble" trade at point "b".

Thanks in advance

Spencer

 

[ChartMan]

Yes, I can see the PD's. The thing is ( and this is easy to say) not everything is black and white. You need to see the overall picture and keep in mind what has happened. ...We had a huge breakout- a case of "too much too quick". I haven't had call to mention that for a long time. There was the almost 100 point gap up. Most would say the gap had to close... I think the key issue today was recognising the total weakness in most of the RSI rises. This would encourage me to allow more leeway in the pullbacks and monitor them closely looking for signs of strength.
The first divergence was likely to re-test 200. The second was likely to re-test 164. I understand your reasoning , possibly,behind the second long-being the point at which the gap closed.
On balance, a difficult call. One can't just take one situation in isolation and make a decision. There are so many things that one can look at in any given situation to form a balanced view, that sometimes the most obvious ( with hindsight) get forgotten. I am not free from guilt in this respect. It's no consolation,but the core rules will, on balance, serve most people very well.

One final point that you may not have read about.... closing a trade on the divergences is usually the optimum place to exit. It is NOT usually the optimum place to reverse the trade.You must wait until later confirmation .....

 

[bansir]

I tried using trailing stops to protect profits but almost came unstuck due to SB bias.


See the red circle+note.

CM's 20pts north of the 100ema are handy I guess

I managed to hold on down to 10069 by focusing on support line breaks & lower lows etc rather than my emotions.

Watch out for the bias though peeps!

All the best, neil

 

[TraderTony]

Wow - unable to trade yesterday but looks like I missed a stormer. I suspect, looking at my charts, I would have exited prematurely at the 10140 level on a PD like Smarwood, but that was still a very nice trade. Well done to all who held down to the close and thanks to CM for your comments yesterday.

 

[ChartMan]

A repeater.... With SB, the bias can be a frightener, as you have seen. It is important to base you decisions on the dow cash chart, and then make your trade on SB. Watching the SB price and basing decisions on that is a trecherous path to follow. This is why it is helpful to have a futures chart as well, like ES. You can see the peak highs ( and lows) that make the SB price bias out well away from the dow cash price. For example, yesterday on ES at 20:08, the price spiked down from the open (1099.5) to 1098.5. The SB cash price on the dow would have probably moved 15 points down , but the cash chart hardly moved at all....
That spike that Basir pointed out.... ES spiked up 0.75 at that time ( 7 points on dow approx.)

 

[smarwood]

Yes, I can see the PD's. The thing is ( and this is easy to say) not everything is black and white. You need to see the overall picture and keep in mind what has happened. ...We had a huge breakout- a case of "too much too quick". I haven't had call to mention that for a long time. There was the almost 100 point gap up. Most would say the gap had to close... I think the key issue today was recognising the total weakness in most of the RSI rises. This would encourage me to allow more leeway in the pullbacks and monitor them closely looking for signs of strength.
The first divergence was likely to re-test 200. The second was likely to re-test 164. I understand your reasoning , possibly,behind the second long-being the point at which the gap closed.
On balance, a difficult call. One can't just take one situation in isolation and make a decision. There are so many things that one can look at in any given situation to form a balanced view, that sometimes the most obvious ( with hindsight) get forgotten. I am not free from guilt in this respect. It's no consolation,but the core rules will, on balance, serve most people very well.

One final point that you may not have read about.... closing a trade on the divergences is usually the optimum place to exit. It is NOT usually the optimum place to reverse the trade.You must wait until later confirmation .....

Cheers CM. :cheesy:

Another tick box to add to my checklist for trade execution.

Spencer

 

[tradesmart]

The 60 min chart shows the Dow in a bearish expanding downtrend channel with yesterday’s third touch on the top line being rebuffed decisively, but mainly a technical move imho, as the major indices filled gaps and generated unstoppable momentum downwards to the lower trendline……

After yesterday’s big points move, maybe we can expect some kind of tighter range consolidation today, but if a breakout from the channel occurs, it could be the catalyst for another decent size move…….....

 

[Pat494]

Could it bounce today ?????

 

[ChartMan]

should do

 

[Delmonico]

I hope this is not seen as rude, but I was wondering if Chartman could post his charts for yesterdays trades as they are used as an invaluable learning tool for all us rookies.
I have been following the strategy for the last couple of weeks, and the results have been truely astounding(for me anyway). During the day I trade using the outlined rules, then at close of business I take great interest in looking up Chartman's daily post to see how he played his strategy. I am then able to use this as a learning tool, to show me where my interpretation was correct but also, and I feel more importantly, where I missed some element(s) or clues.
I hope have explained clearly my reasoning for this request and have not just come across as someone lazy, unwilling to do their own groundwork.
Thanks for all your help Chartman
Dedicated pupil

 

[ChartMan]

OK Joke over- why didn't someone pm me last night and tell me I posted the wrong chart.!!! I know you're all half asleep, but I don't do it as a joke, honest.... It's just that I like to live in the past. :cheesy:
I'll edit it tonight.
PS hope you all went long on the 64 with PD....
target is 025

 

[smarwood]

Hi CM


I'm still miffed about your PD rules, on my last post, you replied saying not to enter a position on a PD or ND. i can't see the difference between this setup posted and my previous post attachment last night. all pullbacks today have been well under the 100MA. is there something else im missing, usually i can use your method to perfection and profit well from using it.

Please could you help.

Thanks again in advance

Spencer

 

[tradesmart]

Hi Spencer

As someone who uses RSI divergences to identify S/R successfully more often than not, I’ll give you my take on it……

(BTW - I don’t think that CM was saying “not to enter a position on a PD or ND” but maybe he’ll have some more to say about it later…..)

From your chart yesterday, in PD ‘A’ – RSI rose 30 to 70 but the price only rose about 20 points indicating price weakness and bouncing just above the falling 100ma – a sure sign of tanking invariably…..

PD ‘B’ – this looked pretty good and solid for a long – the PD occurred at 10140, a strong prior support level, and the time was right at about 19.30ish BST (a common US indices reversal time) The 25ish point rise generated by the PD looked hopeful but again it baulked at the 100ma with RSI not even reaching 70 – weaker than the ‘A’ move.

In short (no pun intended..!) when the index is tanking strongly it does generate PD’s but the price rise produced is not worth trading – far better to stay (or go) short while the index is tanking down under the 100ma until signs of a genuine bottom show.....

As for your example from today’s action – the PD at around 9950, which showed not only on the 1 min, but also on the 5 and 10 min charts (always a positive) has produced a decent 75 point rise, with RSI running from 20 – 80. and the price breaking above the 100ma, with ND giving the signal to close……

With a severe fall of nearly 300 points since yesterday, it may take some time to build a supportive ‘bottom’ before any decisive break north (if any) takes place….

Under 10k again now - it may want to test 9950 ish again......

Hope that this is slightly clearer than mud……..

Regards

 

[smarwood]

Hi TS

Thanks for the explanation. i've been trading for over 2 years now and everyday there's something new to learn.

Cheers

Spencer

 

[hammer]

HI all,

Been waching this thread and keep learning from it. Im sure you will explain later on but ... Can i ask CM or anyone else who may know how you calculate the target of 10025 off the PD at 9964. I see the PD just not sure how to figure out a target.

Thanks in advance

hammer :cheesy:

 

[ChartMan]

Hammer The target of 25 came from the mini bull flag/pullback to 9900 from the low at 60. ( 95-60 ) +90=025. It had nothing to do with the PD.
BTW I've put last night's 1 min chart up so yanyone can go back and look at it properly now if they want to..

 

[ChartMan]

Smarwood.
What can I say.... Rules are there to be broken.... Nothing works all the time... Buyer beware? These rules have been devised over a long time and have so far stood the test of time. I will be the first to admit they do not work all the time. You can't just look at a divergence is isolation and say "that's a bottom" ( or a top). You have to make some additional sort of value judgement that only you yourself can do. Here's the crunch. A 3 pk PD or ND will always get you out mith the maximum certainty of being close to an optimum exit. What happens afterwards is entirely at the whim of the market. This is why I say it is NOT an entry rule. You have to understand that real difference. Sometimes, if everything stacks up together, it may well be that a 3 pk divergence will turn out to be a perfect reversal. That id for you alone to decide.
I appreciate your criticism as it makes me think long and hard about what it is exactly I'm trying to get over and whether or not I am succeeding.
In the final analysis, I can only show you all so much, and it really is just basics. the finesse is down to you . I never set out to teach you all how to be Super Dow Day Traders. My only intention was to help the less experienced among you avoid some of the terrible disasters that await the unwary and to help you preserve your capital for a little while longer than you you otherwise might have.

 

[ChartMan]

So let's call a 3 pk ND top at 7:59 at 64.....Well, that's what I'm looking for right now.....at 7:44