The three day swing charts...
These are constructed using the highs and lows of the past 4 days. For example if the price moves below the low of the past 3 days the swing is down...moves above the 3 day high the swing is up. Each signal is a relevant appraisal of the medium term direction of the market. If the market makes an outside reversal of the past 2 days range the trend has changed.
Balance point of 3 day range...
The balance point of the 3 day range is the 50% level between the 3 day high/low.
Always Know where the market is in relation to this point..It is a key bench mark we must be aware of it.
In fast moving markets we can use a 2 day range.
Rule 1 Keep a 3 day swing Chart
Rule 2 Know the levels from the 3 day balance points & alternate wave equality.
Kept it simple
Always Know the opening range, Yesterdays Close, Yesterdays High& Low, the 50% balance point... traders will allways play these levels.
Take the" hook trade" for example..If the market is not going in the direction of its pevious 3 day trend, but then manages to cross the "opening level price" back into the 3day trend direction,you would take a "hook trade" .
Only take the trade in the direction of the past 3 day trend with a close stop.
There are many examples of how to play these key levels, if you study the indraday 5min charts for the past 6-12 months on the ES (S&P e-mini futs)
The other balance points of the 3 day swing to keep in mind are the 38.2%, 61.8% and the 1:1 equality prior correction of similar degree.
Always check your Square of 9 price levels...do they match any MOB levels/balance points ect.. to give extra weight.
I may as well highlight the 2 bar swing chart...
A two bar swing chart is an excellent tool for market momentum based on just price.
The swing chart swings up or down when comparing the current bar trading range with the last 2 previous bars.
Momentum is up when the current bar makes a higher high without crossing below the low of the past two bars.( Revese it for momentum down! )
In the case of an outside reversal bar momentum has changed without taking into account of the previous 2nd bar.
