Every freely-traded market makes a series of turning points that tend to occur during the day session of the regional stock market.  They can range in number from two to four, but about 80% of the time there are three: HI-LO-HI or LO-HI-LO.  You don’t need to master complex cycle theories or pay to join some elite trading group in order to recognize and utilize daily turning points. I can teach you how to spot them and exploit them with conventional technical analysis.

Scoreboard

ES: 7 wins / 0 losses 

 Mentoring Moment     

Technical indicators have at least three important functions.  First, they act as a point of reference for price movement; second, they act as a filter to remove the unnecessary “static and noise” from price movement; and third, they allow us to see the alignment of momentum on multiple time frames.  Consider a trio of moving averages of varying speeds like my RED, WHITE and BLUE MAs.  The navy blue 5-bar MA moves a bit slower than the actual price, so if the candlesticks are above the navy blue line, I know prices are rising on the short term.  In addition, the 5-bar MA moves with a straighter line with gently rounded turns and none of the hectic zigging and zagging of the actual candlesticks.  Lastly, when I combine that MA with my white 13-bar and my red 34-bar MAs, I can tell if the price is moving in a with-the-trend impulse wave or a counter-trend corrective wave.  The former will present a bullish or bearish RED, WHITE & BLUE alignment.  The latter will probably be RED, BLUE &  WHITE.

Chart Chat

Today’s 3-minute chart shows a HI-LO-HI configuration skewed toward the earlier end of the day session.  Have a great evening.  Be back tomorrow.

Please click on the chart below to make it  larger.

Today’s 3-Minute ES Chart