Today was a great example to highlight the “Divergences” principle about how the can call key turning points intraday which provide excellent low-risk, high-probability opportunities. Let’s see some of these as they unfolded on July 20th.
(Please click for full-sized large image)
We had some super-divergences today, including (at least) two examples of the “Three Push” pattern along with dual TICK and 3/10 Oscillator divergences.
As I highlighted in my presentation with FuturePath Trading (”Best Trades Using Structure, Momentum, and TICK), ‘three-push’ patterns (complete with both 3/10 and TICK divergences) yield some of the BEST trading opportunities intraday.
We began with a gap and then progressed in a 5-wave decline into new lows on the day, which happened to form a ‘three push’ 3/10 Oscillator divergence and a single-swing clear TICK positive divergence. You would place your stop just beneath the day’s low and play for a true trend reversal (which materialized).
You would exit this initial position at the mid-day highs when we formed a counter-three-push pattern reversal complete with three-swing 3/10 Oscillator Divergence and a rare triple-swing negative TICK divergence. This was a powerful spot to exit your morning trade and put on a short afternoon trade.
This short trade was exited as we formed another 5-wave pattern (not shown) into yet another positive momentum (but this time, not TICK) divergence as the market reversed back up and continued higher on the day.
I felt this day should be a reference/lesson in divergences and trading tactics.
To continue reading, and for full description of the other trading opportunities of the day (including a discussion on money management, targeting, and stop-loss methodology as it relates to the morning’s gap), please subscribe to the “Idealized Trades” daily subscription service (at an introductory rate of only $27.oo per month - less than $1.oo per day).
At the end of each summary, I highlight opportunities and possible structure for the next trading day, beginning with a glance at the daily structure. I hope you will find it to be a valuable educational resource, as I teach these concepts and explain them each day through teaching moments like the above summary (but with more detail). Please visit this and the other new resources at the Afraid to Trade Premium website. I would love to have you as a member!
Corey Rosenbloom, CMT
Afraid to Trade.com
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