When I believe the market is topping, I look for the $TICK to make lower highs while the futures is making a higher high, and vice versa when I believe the market is bottoming. I prefer to look for these divergences at key points, such as a 50 - 62% correction or when I believe the market is ready to complete a two to three day swing move and reverse.
You don't always get a divergence when the market reverses, but when you see one, it just increases the probability of a successful trade.
I think that I understood your question correctly. If not, let me know.
Hi Charles,
ReplyDeleteRecently found your blog and wanted to say I like your work. Keep up the analysis. I'm still trying to digest everything.
I also like looking at the $Tick and $Tick Price divergences.
Do you watch the "relative" $Tick highs and lows compared to the price action? Or just primarily watch for the divergences?
On the entry you pointed out, the $Tick had returned to making lower relative ticks lows. (A $Tick low similar to the initial low)
Thanks,
John
Hi John,
ReplyDeleteWhen I believe the market is topping, I look for the $TICK to make lower highs while the futures is making a higher high, and vice versa when I believe the market is bottoming. I prefer to look for these divergences at key points, such as a 50 - 62% correction or when I believe the market is ready to complete a two to three day swing move and reverse.
You don't always get a divergence when the market reverses, but when you see one, it just increases the probability of a successful trade.
I think that I understood your question correctly. If not, let me know.
Charles