click chart to enlarge
First up, the 60 minute chart. Here the net line gave us a good sell early in the week. But net-lines are reversal patterns, and I believe the longer it takes the reversal to occur, the less power it has. To that end, I programmed the net-lines to ‘expire’ after five bars. Notice the net-line sell that was active on the 60 minute chart at 819.50. The market finaly broke that level this morning, but it was too late. The net-line sell had expired. And sure enough, the market was closer to a low than a good sell as it reversed hours later.
click chart to enlarge
Now here’s the daily chart. The net-line sell level we’ve been watching at 816.75 will expire in 2 more trading days. It would be impressive if it had broken it today. Later next week it won’t mean much. But look too at how both the net support and resistance have been reestablished on the chart. The net-line buy resistance was at 874 and then gets reconfirmed and reestablished at 871.75 and now is reestablished again at 866. The net-line buy level will be active all of next (holiday shortened) week. Like wise the support of the net-line sell level at 816.75 was the reestablishment of the earlier 810 net-line. Remember we saw resistance in gold keep reestablishing itself as net-line sells on that weekly chart. The same thing was going on.
The eMini is in a clearly defined range of 810-870.
5 responses so far ↓
1 Rrman // Feb 16, 2009 at 3:21 pm
so we closed the /es monday morning session at 808.75 since its below the sell 816.75 we are on a sell signal for the evening futures opening
2 Rrman // Feb 16, 2009 at 3:22 pm
?
3 deacon31 // Feb 16, 2009 at 5:25 pm
Okay – I’m hoping you folks are learning the drill.
* Determine the trend – watch for price to hit the channel
* When it hits the channel, check for divergences to signal reversal.
* If no divergences, expect a pause at the channel and then a move to the channel on the next higher chart scale.
* Rinse – Lather – Repeat. Divergences signal possible trend changes. – Divergences with price at channel extremes on more than one chart are stronger signals. Check tides/solunar/spiral calendar etc for further confirms.
4 deacon31 // Feb 16, 2009 at 5:27 pm
NQ will be a better tell at the 1200 rounder than ES at it’s 800, america leads the world in technology and we had very good money flow in big cap tech to open this month
5 Rrman // Feb 17, 2009 at 7:08 am
i don’t understand how to look at the divergences
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