Trading Strategy - Using Fibonacci on a Head and Shoulders

When the necklie is broken, wait for a retracment (draw the fib line from the top of the second shoulder to the bottom and wait for the ambush zone). Many traders put a stop loss a little above neckline and the m arket often goes up to take out those traders and push the price temporarily higher.

Chart Patterns - Head and Shoulders

For confirmation, look for a close beneath the neckline as well as increased volume on the day it closes beaneath neckline.

Also check others in their sector. Is their sector showing weakness or strength? Weakness could help confirm the down movement.

Head and Shoulders

Head and shoulders is a reversal pattern that, when formed, signals the security is likely to move against the previous trend. There are two versions of the head-and-shoulders pattern. The head-and-shoulders top is a signal that a security's price is set to fall, once the pattern is complete, and is usually formed at the peak of an upward trend. The second version, the head-and-shoulders bottom (also known as inverse head and shoulders), signals that a security's price is set to rise and usually forms during a downward trend.

Moving Averages for Trading

Use the 8 SMA and 20 SMA

Trading Strategy - 30 Minute Gap Up

This strategy is exactly how it sounds - you see a gap up and look at the high point of the first 30 mins. You then buy any break out of that high point after the first 30 mins. You can confirm the breakout by using market internals, such as the VIX, TRIN or TICK. See graph below:

Trading Strategy - Ambush Trade

(Taken from SandP50analyst.com)

When you have a dramatic move up or down, people try to chase it. You should use a 2 min chart for this. So for example:


FSLR - within the first 30 mins of open, this thing gapped down hard.

What you do is wait for it to kind of bottom out. Once it has bottomed out, draw a Fibonacci retracement from the beginning of the fall to the end (where it bottomed out). Now the 50% retracment is where the ambush will happen. You want to put a short order around that 50% retracement. You can confirm that it will move down from the 50% by waiting for the candle that hit the 50% to be formed. THe second candle should have closed lower than the low of the previous candle.

Trading Strategy - Using an oversold TRIN

Taken from SandP500analst.com

When the TRIN hits 1.5, you want to buy the S and P 500 (you can go long a call for maximum profits).

VIX

When market is up, VIX is down.
When market is down, VIX is up.

If market is up, say, 3% - you want the VIX to be down almost by double. Anywhere from 5-7% (or higher).

If market is up 3%, and VIX is only down 1.5%, it does not really confirm the up move.

If market is up 1% and VIX is down alot, like 10%, than that is very bullish.
If market is down 1%, and VIX is up a lot, like 10% than that is very bearish.