Trading the imperfect double top – PART I.

The double top is not a reversal pattern

When it comes to the chart pattern of double tops, traders often look for perfection. I would like to advise against perfection; and, instead, introduce how to search for the taste of a “good enough pattern.” Imagine that prices progress in an uptrend and then suddenly find resistance. Prices pull backs then turns north again, Trading the imperfect double top – PART I.

Trend Division Line

The web of lines in trading - an SPX case study

Traders can profit from a set of lines that enables them to tell apart a trend from a correction. This discernment is essential when it comes to adjusting our trading strategy to the current market condition. What is more, these easy to draw lines represent a thinking process aimed at the proper assessment of the Trend Division Line

NZDUSD Trading Signal Was “Against the Odds”

...echoing in the background noise of a casino

One core flaw traders make is when they use support and resistance levels, trend lines or Elliott waves alone – in other words, only “Context type” of ideas. Others traders fancy near term price action or candlesticks analysis alone, and they miss the forest for the trees by relying totally on the right side of NZDUSD Trading Signal Was “Against the Odds”

Sherlock Holmes the Great Trader

US dollar and a magnifying glass

A market analyst is a bit like a detective. In order for a homicide detective to make an arrest, he needs a body, a murder weapon, motive, physical and testimonial evidence. Just like a detective, making market forecasts is all about building a solid case based on multiple types of evidence. Trader Skillset uses Elliott wave analysis as our primary Sherlock Holmes the Great Trader

What Seperates Great Traders from the Pack?

a giant ferris wheel in the evening light the methaphor of the trader's wheel

Every trader might have a different answer based on their personality and process, but we do see many common traits. Many might think that it’s an ability to analyze a chart, and while that skill is important, it might only be 10-20% of the answer. Today, we will share our evaluation checklist that defines the areas where successful traders get the edge day-by-day, setup-after-setup.

US Dollar Breaks 12-Week Rally

Last week we pointed out that sentiment, and our counts, suggested a pause in the 12-week-in-a-row dollar rally. Specifically, we wrote, “there might be some further follow through to the upside early next week, but I’d bet against the US Dollar Index closing out the week with another gain.” That’s not to say we’re now dollar US Dollar Breaks 12-Week Rally

Oil Due to Bounce, Should Be Corrective

Photo of an Oil Rig Somewhere in the Raugh North Sea

Today we’ll take a closer look at our Elliott wave count for light sweet crude. Again, we do this to provide the Context of what a market “might do” or is likely to do. But, once we’ve gained some perspective, and formed an opinion, it’s time to do an analysis of Momentum, in Trader Skillset’s Oil Due to Bounce, Should Be Corrective

One Wave at a Time on the S&P 500

Elliott waves are powerful, but they don’t make one omnipotent. For instance the S&P500 quarterly bar chart’s trend is bullish and the monthly is bullish; but, the weekly bull trend is ripe for a pullback based on RSI trend analysis. The daily on the other hand got stuck at 62 on the RSI which suggest One Wave at a Time on the S&P 500

Shooting For the Peak? Use Our “Terminal Set Up”

A spiraling tape form a channel

Now that the S&P 500 has reached the 2000 level, investors and traders are becoming more comfortable with the idea that prices will simply continue higher, for years. On the bear side we hear the argument about the extreme levels of optimism which should reverse the market big time. Who is right? For sure, a trader pays attention to something else.

Homebuilders ETF Forms a Head & Shoulders

XHB ETF monthly chart how the rally from the 2011 low loses momentum

The homebuilders (XHB) are always an interesting group to examine, because it tends to be an “early cycle” group. It’s a stock group that leads the market most likely because it touches so many different areas of the economy (commodities, interest rates, employment, etc.). As evidence of its leading nature, take a look at a stock Homebuilders ETF Forms a Head & Shoulders

Anti-Signal: Is There Any Juice Below Today’s S&P Bear Break?

Daily chart of the S&P 500 E-Mini futures contract on July 17

Today’s bear bar seems very muscular without considering the context; large size with a failed breakout attempt on the top and a close near the low of the day. Bear reversals tend to succeed in bear trends when they reverse a weak bull leg against the resuming bear trend. This is absolutely not the case Anti-Signal: Is There Any Juice Below Today’s S&P Bear Break?

Three Times the Speed

Many traders have a basic understanding of momentum. But, we think most traders would benefit from three tweaks to the traditional thoughts on the topic. In fact, in our proprietary trading system, momentum helps to identify and confirm the context; and, as such, it is the link between historical prices and the short term signals. Traditional Momentum Three Times the Speed