Hello guys!
Cobra: very nice posts and charts!
In particular, I like the hollow red bars! They are simple, elegant and they make sense! I did a back-test of situations that met your entry criteria and a quite spectacular trade, initiated by such a signal, showed up. It also recalled some memories of right or wrong decisions that were made during the months after…
At the beginning of Oct 2009, during a correction of the Bernank UP trend, three solid red bars were followed by a hollow red, which looks pretty much like our friend on Friday, since some people might call them both “hollow tombstones“. Now let us say that you go long SPY next morning, on Oct 5, when the price also jumps above the EMA(42, green line on chart). OK, then the price kept climbing within the Mov. Avg. Envelope 42 (yellow) until the Jan/Feb 2011correction and whipsaw. At that stage, many people went out of all their long positions, went short and stayed short too long. The perma-bears were SURE that the market could not resume a sustainable uptrend on a historically record low volume and in a weak economy! But those who figured out the game, went long at the reentry in the yellow envelope and stayed long until the rounded top of Apr 2010, when there were lots of “signs” and even the laziest bull should have sold the longs as the price dropped under the MAE(42).
BTW, I am not suggesting that we have a similar uptrend ahead of us! LOL!
Same chart, magnified:
http://images.investorshub.advfn.com/im ... bargif.GIF