Trading What I See

Today there was a nice rally starting about 7:45 (Pacific). The question wasn’t whether you caught the beginning of the rally, but how soon you decided that the direction had reversed. There were four pullbacks before price topped about 10:15. All were tradable, but only after you saw the change of trend.

Although I trade a 3 minute chart, a 15 minute chart often gives me hints of potential turning zones. Not trading signals, but suggestions of what might happen. I watch for both equal moves and various Fibonacci relationships. When the 15 minute Stochastic became oversold about 7:30, this morning’s downmove looked much like what occurred late last week. A quick check showed a 12 bar drop matched by a 13 bar drop. The measurements were 9.9 points versus 10.4 points — only a 5% difference.

Buy? Not this trader. But the potential for a reversal from this level allowed me to consider each of the following pullbacks as possible uptrend entries on a 3 minute chart rather than as a continuation of the downtrend. Notice how the equal moves produce a parallel channel. Trendline traders could have caught this even without counting bars.