We got a nice bounce in the Emini on Friday and a bottom to top range of over 60 points. I'm almost getting used to these crazy range days!
The Hilbert Sine Wave caught the turning point nicely on the 45 minute Emini chart. But I'm always looking for confirmation of turning points with Volume Patterns. In this case we got one of my favorites – I call it the "Red, White & Blue" Reversal.
"Red, White & Blue" Volume Pattern (Emini 45 minute)
The name comes from the default coloring in the Better Volume paintbar indicator. This reversal Volume Pattern consists of a Climax volume bar, followed by a High Volume Churn bar then reversal of direction confirmed with a Climax volume bar in the opposite direction.
In the case of a bottom reversal it's a Climax volume down bar (white paintbar), then a High Volume Churn bar (blue paintbar) and then a Climax volume up bar (red paintbar). So White, Blue and Red. For a top reversal it's the opposite – Red, Blue and White. The Emini chart above should show you what I mean.
The Volume Patterns aren't always as clean as this one. Sometimes you'll get several High Volume Churn bars; sometimes you'll get a final Volume Climax bar after the High Volume Churn bar. The Climax Volume bar in the opposite direction can also be late – but it's designed as confirmation, not necessarily an entry signal.
Volume Pattern "End of Trend" Confirmation (Emini 5 minute)
I like the High Volume Churn bar to coincide with a Hilbert Sine Wave turning point. The lower time frames should also be showing an exhausiton of the down trend. In this case the Emini 5 minute chart was showing an "End of Trend" warning signal. But any cyclical activity would have shown that the strong down trend was over and a trend change was possible.
When using multiple time frames like this I use a multiple of 3 between the lowest time frame and the intermediate time frame (5 minute to 15 minute). Then another multiple of 3 between the intermediate time frame and the highest or trend direction time frame (15 minute to 45 minute).
I hope this article about Emini day trading using cyclical turning points, volume patterns and multiple time frames was useful to you. Good luck with your Emini trading.
