Monday, January 19, 2009

5 Minute $TICK Pivots

Thought that I would take a closer look at turning points of the $TICK pivots on a 5-minute chart. I typically do this every day to train my brain to know what to look for during actual trading.

One of the higher probability trades is to look for a small correction following a new lower high/low or higher high/low combination. The market most of the time will continue the trend for another 15 minutes or more following these corrections. You will typically see them occur more frequently in less volatile markets.

Just after 1035 ET, the market corrected a little more than I like, but still stayed below the previous pivot high. At the 78% correction point, we started to see a $TICK bearish divergence, and the futures then continued the down trend to eventually make another lower low.

As the European markets closed and near the 50% correction point, we got another $TICK bearish divergence, and another continuation of the downtrend.

Just after 1350 ET, we got a 50% correction following a higher high/low combination. However as you can see, we don't always get a $TICK divergence. Buyers simply starting buying again at the 50% correction level without showing their hand through the $TICK indicator.



  1. Generally, with respect to timing on the 1 min $ there a $Tick zero line relationship relative 2SMA $Tick Pivot ,i.e. above $Tick zero for longs and below $Tick zero for shorts ?

    IS there a $Tick zero line relationship relative to the 2SMA $Tick & 38 EMA $Tick pivot crossings (trigger) where both the $Tick 38 EMA and 2 SMA $Tick are located below $Tick zero line for shorts , and longs located above the $Tick zero line ?

    Trying to understand the unimportance of the $Tick zeroline (static) relative to the 2 SMA $Tick and 38 Ema $Tick pivots (dynamic).

  2. Hi Bill,

    The zero line of the $TICK is pretty close to the long term average (10 to 20 day avg) as long as there is no up tick rule in the equities market.

    As far as timing on the 1 minute chart, I actually do the oppostite of what you said. I typically am looking to go long when the $TICK is below the zero line and downward momentum is weakening and upward momentum is starting to strengthen. I look for short possibilities when the $TICK is above the zero line. Generally, if the long term trend of the market is down, and the $TICK has corrected above the zero line, and the futures has not made a higher high indicating a normal short-term correction in the longer term trend, and upward momentum is being replaced by downward momentum in the $TICK, this is usually a good point to place a short position. Oppostite is true for a long position.

    I only use the 20 and 38-period EMA on the 5-minute chart to get a sense of the longer term momentum. The 2-period SMA on the 5-minute chart helps to see the cycles. I use the 2-period SMA on the 1-minute chart to get a sense of when momentum is changing.

    Did I answer your question?