Three Push and TICK Divergence Form Intraday Low July 6

Jul 7, 2009: 1:15 AM CST

In yet another example of how an intraday low in the SPY (and other major market ETFs) are formed either on distinct momentum or TICK divergences (or both!), the intraday price action of SPY gives us yet another crystal clear example of this trading opportunity.  Let’s learn from it.

SPY 1-min (half-day) July 6, 2009:

We’re seeing the SPY 1-min structure from 9:30 EST to around 1:00pm (compressed).  I’ve also overlaid the TICK (stocks making an up-tick at the moment minus those making a down-tick on the NYSE).

Price formed the morning high on a three-push reversal pattern (check out our new free Education Center which is a growing and developing resource) which was confirmed with a negative momentum divergence (not shown).

We then moved to new TICK and price lows just after 10:30, but look closely at the TICK as price pushed to new lows on the trading day.  As price made three mini-pushes to new lows, the TICK actually made higher lows – that was a glaring non-confirmation which hinted odds favored a reversal off these levels.

That meant you could have put in a long (buy) trade here and played with a tight stop to play for a possible reversal… if you were watching the TICK along with price.

We did get the reversal, and – like many examples I have highlighted – intraday highs and lows often form on distinct TICK or Momentum (or breadth) divergences.

I explained this and many other trading opportunities and ‘lessons’ from the price structure in my new “Idealized Trades” report service which is both an educational “learn by seeing multiple examples” resource but also takes the structure of the day and highlights key price levels and opportunities to watch for the next day’s trading session.  Check out the information on this new and unique service at the new Premium section of Afraid to Trade.

The more times you see these concepts and simple patterns ‘play out,’ the better you’ll be to act upon these opportunities and profit from these concepts in real time as they occur in the heat of battle – that’s what it’s all about!

Corey Rosenbloom, CMT

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2 Comments

2 Responses to “Three Push and TICK Divergence Form Intraday Low July 6”

  1. Bob Says:

    Another observation – Starting @ 11:45 AM a trend line can be drawn across the tick highs forming an upper bound of a triangle. Starting @ 12:30 PM a second trend line can be drawn through the tick lows defining the lower bound of the triangle. Here also, is another example of the three push pattern aligning with the lows, but in this example, the tick lows are not as deep. What does a -900 compared to -600 Tick mean? And while this triangle pattern forms within the Tick, price is also forming a consolidative triangle over the same period.

    These patterns occur often, but what constitutes a reasonable trade set up… The anticipated move must predict a large enough price change to justify taking a position… This later triangle occurs within a $.20 range. Price projection would only anticipate a comparable move from a break in the triangle… would that be worth the risk; and what is a reasonable risk vs. reward ratio?

  2. Bob Says:

    Another observation – Starting @ 11:45 AM a trend line can be drawn across the tick highs forming an upper bound of a triangle. Starting @ 12:30 PM a second trend line can be drawn through the tick lows defining the lower bound of the triangle. Here also, is another example of the three push pattern aligning with the lows, but in this example, the tick lows are not as deep. What does a -900 compared to -600 Tick mean? And while this triangle pattern forms within the Tick, price is also forming a consolidative triangle over the same period.

    These patterns occur often, but what constitutes a reasonable trade set up… The anticipated move must predict a large enough price change to justify taking a position… This later triangle occurs within a $.20 range. Price projection would only anticipate a comparable move from a break in the triangle… would that be worth the risk; and what is a reasonable risk vs. reward ratio?