The Three Push Reversal Pattern in GLD Intraday

Sep 28, 2009: 10:42 PM CST

With Gold (and the Gold ETF of GLD) making a sudden and sharp reversal back to the downside, I thought it would be a good idea to highlight the “Three Push” pattern – one of my favorite patterns – that preceded the reversal and how you might have anticipated and then traded the reversal intraday.  Let’s see it.

GLD certainly showed us a great example of the “Three Push Pattern” (which I detail at the expanding Education section of the website).

This pattern is recognized by three symmetrical “pushes” or swings up in price (notice price peaks) that form on three symmetrical negative momentum divergences – as shown above.

The pattern is confirmed with long, upper shadow ‘doji’ or other type of reversal candlesticks that often ‘poke’ through the outside of the upper Bollinger Band.

The Three Push is a “Revesal” pattern because it highlights the inability of buyers to ‘push’ price to new levels – almost as if they are giving it the best they can and are failing at the highs.

Aggressive traders can short on the dojis (in this case, near $97.70) at the highs and place a stop above the intraday highs of $97.80 – or go even further above the ’round number’ resistance at $98.00.  Either method would have worked.

The target would be a “Trend Reversal” which would allow you to play for a larger, unspecified target that seeks to capture the reversal of a trend as close as possible to the highs.

As price broke beneath the rising 20 period EMA – which served as a “late entry” and confirmation of the reversal – you could have began trailing your stop above the falling 20 EMA.

Price ultimately gave us another entry – what I call the “Cradle Trade” – as price retraced back to the confluence (bearish cross-over) of the 20 and 50 EMAs.

Finally, a nice quick “Bear Flag” formed into the close (I didn’t label it – can you spot it?).

These are the types of set-ups and trading opportunities I describe for you each day in my “Idealized Trades” detailed reports.  These same patterns, structures, and trades repeat across all markets, stocks, and ETFs – only the patterns are cleaner in some markets than others.

Continue studying this chart for additional insights into important patterns and trade set-ups so that you can recognize them in real time when they develop again.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

8 Comments

8 Responses to “The Three Push Reversal Pattern in GLD Intraday”

  1. terlyn Says:

    Now I get it. Thanks.

  2. Corey Rosenbloom, CMT Says:

    It just takes seeing this pattern over and over for it to catch on!

  3. Bob Says:

    This three push pattern confirms a five wave cycle…

    What about the ABC corrective pattern? Can you offer an example showing MACD movement and tick divergence there?

  4. Corey Rosenbloom, CMT Says:

    Hey Bob,

    I'll take a look but I've found the 3-wave impulse move (new indicator high on top of 3rd wave; divergence on 5th wave) to be far more easy to trade than the corrective phases.

    Sometimes, the C wave is more dynamic than the A wave, and so you won't really end on a tick/momo divergence at the end of the C wave. There's also 11 or so types of corrective “ABC” patterns and only 1 major 5-wave impulse pattern (with the exception of the ending diagonal… or I suspect the 3-push pattern as shown here).

    Send over any examples you have and I'll take a look and perhaps post those as well – may be on to something here.

  5. terlyn Says:

    Now I get it. Thanks.

  6. Corey Rosenbloom, CMT Says:

    It just takes seeing this pattern over and over for it to catch on!

  7. Bob Says:

    This three push pattern confirms a five wave cycle…

    What about the ABC corrective pattern? Can you offer an example showing MACD movement and tick divergence there?

  8. Corey Rosenbloom, CMT Says:

    Hey Bob,

    I'll take a look but I've found the 3-wave impulse move (new indicator high on top of 3rd wave; divergence on 5th wave) to be far more easy to trade than the corrective phases.

    Sometimes, the C wave is more dynamic than the A wave, and so you won't really end on a tick/momo divergence at the end of the C wave. There's also 11 or so types of corrective “ABC” patterns and only 1 major 5-wave impulse pattern (with the exception of the ending diagonal… or I suspect the 3-push pattern as shown here).

    Send over any examples you have and I'll take a look and perhaps post those as well – may be on to something here.