Got a question from Marcus, an Emini Dow (YM) trader, about the Better Momentum indicator signals. I thought it might be useful to share the video response. The comments here are equally applicable to the Emini (ES).
Before entering a reversal trade (against the prevailing trend) be sure to check for exhaustion or blow-off buying/selling activity. Two patterns typically occur:
- First the exhaustion buying/selling activity followed by a series of bearish/bullish divergence patterns, or
- A series of bearish/bullish divergence patterns followed by a final burst of (exhaustion) buying/selling.
To take a trade in the direction of the trend, you don't need the exhaustion buying/selling activity – just the Better Momentum divergence signal in the direction of the trend.
If you're reading this article via email or RSS reader, then follow this link to view the Momentum Indicator video on the website. Towards the end of the video there are a couple comments about the current market and what I'm looking for over the next few days.
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Momentum Indicator Question from YM Trader – 10 November 2009 (10:07)
Good luck with your Emini trading.
