Friday's activity was extraordinary – not just in the Emini but US Dollar, Gold and Bonds too. I was expecting a bounce in the Emini after Thursday's close – because "all the sellers had sold" – but the speed of the move and subsequent action was a real roller coaster.
The video below shows my charts from Thursday and Friday. This is turning out to be a bit of a series on the Better Momentum indicator and exhaustion volume – apologies if I'm being repetitive.
If you're reading this article via email or RSS reader, then follow this link to view the momentum indicator video on the website.
Momentum Indicator & "Running Out of Bullets" (5:41)
If you trade using the Better Momentum indicator a few points are worth making:
- Exhaustion volume signals are plotted with only 1 bar delay.
- Divergence signals are plotted with a variable delay. This delay is needed to confirm the signal. If the signal is close to the zero line the delay is usually only 1 bar, but can be as much as 4 bars if the signal is further from the zero line.
- Exhaustion volume signals need to be confirmed with Divergence signals that happen subsequently. This is more important for shorter time frame charts. On longer time frame charts the exhaustion signal may actually mark the extreme price and start of the new trend.
- I never take trades based on the Momentum indicator signals alone. I use price cycles (Better Sine Wave) and Professional/Amateur volume patterns (Better Pro Am) for confirmation.
Good luck with your Emini day trading.