Trin Indicator Divergence Pattern
The Emini closed up 3.00 points at 1,549.00 on Tuesday. We got a classic Larry Williams Oops pattern today. The Emini opened below yesterday’s low, closed the Thursday-to-Friday gap and then rallied to close near the high.
The market appears to be consolidating around the 1,550 level and getting ready to break higher. However, take a look at the chart above with the Adjusted TRIN Indicator added. Today’s reading was -40, showing that the professionals were selling down their positions. A negative Adjusted TRIN reading with the close above the open is a bearish divergence pattern and shows internal market weakness.
Bearish divergence patterns are shown on the chart above with white dots, bullish divergence patterns are shown with red dots. This pattern isn’t fool proof – 8 of the 12 signals on the chart were good. But the pattern is useful when combined with other indicators – in this case the Composite Trend Oscillator that peaked yesterday has now turned down. Let’s see what the Emini does tomorrow.
Just as an aside, I have been working on an update of the TRIN Indicator package for use on intra-day charts and day trading. The update is almost ready and will be released shortly.