Here are some trade setups that I thought you might want to consider:
SETUP FOR TRADE: 1. 2-Month low for range movement indicator. 2. CCI reading > +100 3. Break previous day's low. 4. Risk 3 Average Ranges. 5. Cover when CCI <-100. 6. Or Trail stop by 3 ATR behind lowest close.
This generates a few trades with the first being a losing trade. The "TREND INDICATOR" is a simple, price based indicator that has no price bounds. The "RANGE MOVEMENT" indicator needs to make a new 2-month high or 2-month low to indicate the trend. THEN: In an uptrend, buy dips to CCI -100 and exit on rallies to +100 or a 2-month high in price. In a downtrend, sell rallies to CCI +100 and exit on declines to -100 or a 2-month low in price.
Therefore, a sell signal is setting up here: JPN225 needs to break under a previous day's low (PDL) to trigger a short sale.
Tim 5/20/2014 10:59PM EST
Comments
timwest
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NOTE: THE LOW IN MAY WAS NOT LOWER THAN MARCH - thanks to user Dhaliwal for pointing that out! THEREFORE, this sell signal is not valid. NO TRADE TAKEN
dhaliwal88
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Nice system! One question, I dont understand the Range Movement indicator setup. On the Nikkei chart, the indicator reads 482.4179 (now) but in the last two months, the low has been 481.5154 on May 20th, so today's reading is not a 2 month low. I studied the RDC chart as well to see if I was missing something but still cant figure it out, my apologies for not seeing this. Also, your sell stop looks to be at about 14520, yesterday's low was 14558, do you calculate a percentage below which you will enter the trade or a set numerical value?
timwest
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Hello Dhaliwal, Good question re: the range movement indicator. I thought the May 20 low for Range Movement was a lower low than the low in April but it wasn't. So you are correct. As for the sell stop, I just drew in about a range under the low of the previous consolidation. So therefore, the sell signal now is invalidated and there should be no sell orders in this market. Perhaps you can find a buy signal somewhere, but that isn't how the system is devised. Thanks for your patient comments. It would be really nice to know what % of S&P500 stocks are in buy mode and a sell mode at any moment. How many are flashing a fresh buy and how many are close to getting stopped out, etc. It would be very useful information. Feel free to post any signals that are registering in other stocks. Cheers. Tim 9:18AM Monday, June 2, 2014
timwest
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For clarification, the low in May just needs to be a 2-month low, not the current reading. I didn't address that in my last answer. What you want to see if a push down in price that sets the indicator to a new 2-month low. Then on the next rebound to overbought, just check to make sure the indicator doesn't go to a 2-month high, and sell on the roll-over under a previous day's low. That is the setup and the entry method. Thanks for asking. Tim