History Repeating with TICK Forecasting Intraday Reversal Lesson

Feb 18, 2011: 3:38 PM CST

Did you learn the lesson I showed this Wednesday entitled “Using TICK to Forecast Intraday Reversals?”  If you didn’t, here’s yet another chance to learn the important lesson – as history repeated the set-up/pattern almost exactly today that formed on Wednesday.

Let’s look at today’s chart as another example of this critical concept:

Click for full-size image.

I won’t take the time to explain all the concepts I did in the prior post on forecasting intraday reversals with TICK – be sure to view that post for full details.

The main idea is that TICK can deliver a “One-Two” punch signal when it comes to intraday index futures or ETF trading.

The first “punch” is the multi-swing negative TICK divergence, which you can see above.  As price pushed on to successive higher intraday highs, the TICK extreme DID NOT confirm the high – resulting in a multi-swing divergence.

The second “punch” is the Kick-off Signal, wherein TICK pushes to new intraday lows when price is clearly NOT making a new intraday low.

When you get a multi-swing TICK divergence followed by TICK Kick-offs, the FIRST thing you should do is close your longs immediately.

Second, for aggressive traders – or just your typical experienced intraday trader – you can look to profit for a high-probability (though never guaranteed) intraday reversal that is triggered with the breakdown of a price trendline.

I show three opportunities to get short:

1.  The most aggressive entry occurred on the break of the morning trendline ahead of the Kick-off signal

2.  The price breakdown just after noon gave the first Kick-off signal as price broke the little support of the $134.55 low.  The stop would go above the immediate swing high at $134.65 or preferably above the intraday high at $134.70.

3.  The “Bear Flag” breakdown is one of my favorite trades, and it too came with a little TICK divergence.  The entry is just under $134.40 (trendline break) and stop above $134.50.

Keep in mind if you’re trading leveraged ETFs, the values will be different just as they will be if you are trading the @ES futures contract (my preference for intraday trading) but the structure/logic/concepts/set-ups will be similar.

You can even take the trade trigger off the SPY and then execute in your preferred trading vehicle.

As always, these are the lessons I describe/teach in each day’s Idealized Trades report for members.

And why is it important to take the time to learn these lessons and concepts?

Because they do repeat.  What happened today happened Wednesday (and many more times in the past)  – those who were aware and prepared had a much better chance to recognize this development in real time and thus profit from the opportunity.

Here’s Wednesday’s chart as a comparison reference:

What happened Wednesday both up and down is almost identical to what happened today.

Take time to learn these little intraday concepts and trading tricks – history will repeat… sometimes sooner than we all think.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

8 Comments

8 Responses to “History Repeating with TICK Forecasting Intraday Reversal Lesson”

  1. Tweets that mention History Repeating with TICK Forecasting Intraday Reversal Lesson | Afraid to Trade.com Blog -- Topsy.com Says:

    […] This post was mentioned on Twitter by Corey Rosenbloom , finlwiz. finlwiz said: RT @afraidtotrade: History Repeating with TICK Forecasting Intraday Reversal Lesson $STUDY $SPY http://tinyurl.com/4pc5qyf #mkt $$ […]

  2. Branhamgarth Says:

    Thanks Corey

    What kind of platform do you need to get ” the tick “. I am using stockcharts.com and don't see it
    I use a MAC by the way..

  3. Jjhinton Says:

    On StockCharts – $TICK is the symbol

  4. Branhamgarth Says:

    ah I see that. Thanks. I also use the freestockcharts.com but don't see it there either.. I think Corey has it on a minute by minute basis. I have done a little research and think you can only get it with a real time data feed and a charting package that takes it down to the tick … looking at those now but don't see one that works with MAC computers.. all windows so far… also looks like a $100 + a month to be able to get it… looks like it is great to have info though…

  5. Branhamgarth Says:

    Well, now that I figured out how to get the $ sign in the $TICK works just fine in freestockcharts.com. All the way down to 1 minute. Very nice and a great tip !!

    Thanks Corey

  6. Stock Market Trading System Says:

    Thanks for sharing such a good information. I think charts do really help in stock trading.

  7. Ben Says:

    Hello Branhamgarth, I'm looking for the same but unfortunately I don't have the 'great tip' Good you inform me how to get this STICK working in freestockcharts.com ?
    Thanks

  8. Branhamgarth Says:

    Ben,
    Two things…
    If you type any letter while on the screen ( to get the symbol box up ) then you can back space ( while the box is still up ) and put the $ sign then TICK in it will work. you can't just type in the $ sign as it changes the time period of the chart…
    Secondly, as good as it sounds… unfortunately on freestockcharts.com the information is delayed and looses its effectiveness… may need to fork out the bucks for level 2 data…