We could be lining up for one of my favorite Multiple Time Frame setups. In trading with Cycles, one of the most important principles is that "Trend moves in lower time frames are equivalent to Cycle moves in higher time frames."
What I’m looking for is an "End of Trend" warning signal in the Lower time frame and a Cycle turning point in the Higher time frame. This works in any combination, for example, 233 and 2,097 tick or 5 minute and 45 minute charts. In this example, we’re looking at a longer term trade with the 135 minute and weekly Emini charts.
Multiple Time Frame: End of Trend in Lower Time Frame (Emini 135 minute)
In the 135 minute chart we came close to breaking the PullBack level on Friday. But then rallied strongly on Monday above it. We’re now on the way to an "End of Trend" warning signal when the Better Sine Wave crosses – on Tuesday or Wednesday.
Multiple Time Frame: Cycle in Higher Time Frame (Emini weekly)
The Higher time frame is the Weekly Emini chart. This is roughly 9+ times above the Lower time frame (135 minute x 3 = Daily and Daily x 5 = Weekly). Here we’ve just formed a Cyclical turning point, which also happens to be a PullBack in down trend. So we could have an "End of Trend" signal lining up with a Cyclical turning point in the Higher time frame. This would confirm a medium term Short trade.
Low Volume Up Day (Emini daily)
To add to the story, Monday was a Low Volume Up Day on the Emini, showing a lack of Demand to push strongly though the 925 resistance level.
Low Volume Up Day (NASDAQ daily)
This was probably better illustrated with the daily NASDAQ chart, where you can see the Volume was particularly weak. The NASDAQ tends to lead the broader market at turning points, so I’m watching activity on this market closely.
If you didn’t catch it earlier the Commitment of Traders has been updated here.
Good luck with your Emini trading this week.