In my Emini day trading I use cycles with volume confirmation. The strength of this approach comes from 2 things:
- Both cycles and volume are leading indicators of market action, and
- Cycles and volume are non-correlated measures of market strength
This approach also has the advantage of working in all time frames, ranging from tick charts to daily, weekly and monthly charts. The example below shows a 15 minute Emini chart with a short trade setup.
Emini Day Trading with Cycles and Volume (Emini 15 minute)
The setup came on Tuesday after the FOMC announcement. The Emini rose 30 points on climactic volume and ended the day with a couple of High Volume Churn bars (colored blue). This indicated that new sellers were entering the market, preventing price from rising and keeping the bar's range small.
The next day, we had a Pull Back to the 900 level. The Better Sine Wave indicator marked this Pull Back automatically with the "PB" text on the chart. The advance after a Pull Back is equivalent to an Elliott 5th Wave and finishes with an "End of Trend" warning signal. Again marked automatically with the "END" text on the chart.
Note for users of the Better Sine Wave: In lower time frames (tick charts or up to 5 minute charts) I wait for a cycle turn after an "End of Trend" warning signal before considering a reversal trade. This is because the market needs some time to exhaust after a trend move and start moving in the opposite direction. In higher time frames (15 minute and above) the market can reverse more quickly after the "End of Trend" signal.
This "End of Trend" advance was made on considerably lower volume. This indicated that there was less demand and not enough buyers to push past the 915 level. Confirmation came with a High Volume down bar (colored white) and time to go short. Cycle tops were also in place on the 81 minute, 135 minute and daily time frames, which added to this high probability trade.
Good luck with your Emini day trading.