Trading Clean Patterns

When looking for equities to trade, I want to find the cleanest trading patterns. This applies to all the multiple time frames traded. Recently, the cleanest pattern for the market has been the 60-minute chart.

If you look at the daily chart of QLD, you can’t find a decent trading pattern in the last week.

Now look at the 60-minute chart for QLD. Buy signal 1 came after a gap higher followed by 3 bars down. Five bars up and it’s time to sell at point 2. Those fibonacci numbers are doing their thing. Five bars down leads to a gap down the next morning. The bottoming tail, higher high and lower low signal another buy at point 3. The stock stalls 5 bars up at recent resistance. The first news on BSC hits and we see the market tank. If you’re ignoring the news, and just watching the chart, you see it still trades range bound. Not so scary. The gap lower yesterday is followed by a higher high buy signal at point 4. Combine that with a bullish VIX reading and a high p/c ratio. Seven bars up into the fed announcement calls for another sell. A bottoming tail with volume takes the ETF back to it’s 200 ma.

Look at the buy signal and trend change on the 5-minute chart yesterday.