Trend Lines (Emini 81 minute)
TRIN indicator discussion today. But before we get to that, just a quick update on the possible trend line breakout discussed after Thursday’s close.
As expected the employment numbers did spark the Emini into life. However, the breaks above 1,380 (one before the open and one around noon) were both on low volume and couldn’t hold. We’ve now closed below the lower trend line and the green bars on the chart above indicate we’re in a down trend.
The Emini might try again to break above 1,380 but the TRIN indicator suggests the market is weak. See below.
TRIN Indicator (Emini daily)
It was only 10 days ago that we saw the very same TRIN pattern:
- Better TRIN Indicator shows bearish divergence (white dot)
- Doji candlestick pattern showing indecision the next day
- Better TRIN Oscillator over-bought (above +80)
And 10 days ago this pattern led to a 38 point slump before the 1 April rally.
TRIN Indicator Divergence (Performance Report)
Back testing the TRIN divergence pattern shows good stats with a profit factor or 3.3 and 2:1 win-to-loss ratio.
TRIN Indicator Divergence (Equity Curve)
And the equity curve shows consistent performance. I’m not a big fan of seasonality, but we’re also coming into the 15 April US tax filing “window” that usually sees profit taking (when the market is up!). My best guess is that the Emini will fail this time to break 1,380 and instead we’ll test 1,360.