And yet another Rule of Thumb video. The first in the series talked about the market does not like flat tops. The second video talked about consolidation after trend days. This video talks about the 11am window for reversals.
Thanks Barry, This is great stuff. I had the ‘its after 11am Chicago time’ in my head today and did not take a short trade as a result. I guess I’m starting to figure things out after getting your indicators and many hours of Blog reading and watching. This with your last two Rule of Thumb videos, has resonated and helped me change some wrong thinking. Thank you. Domenic B.
This rule of thumb is possibly the most important one. It has kept me out of dozens of losing trades when I was just looking to prove I was smarter than the market and pick a top or bottom. The rule goes something like this.
If the market has not reversed by 11am (Chicago time, CST) then it’s unlikely to be a reversal day. Don’t expect any strong moves against the morning trend direction. Instead the most likely scenario is that the market will continue in the direction of the morning trend, break to new Highs if it’s in a uptrend (Lows for a downtrend). But the breaks will only be by a bit at a time, maybe a half point or full point on the Emini.
Real reversal days have gotten going by 11am. That’s given the Professionals time to exit their positions and get positioned for a decent trend move in the opposite direction. Plus the morning activity will have suckered in the Amateurs. Remember, the Pro’s are in it for a decent move – 3 or 4 points ain’t good enough – and a bigger move will take time.
And don’t forget, you can use the free Vertical Line Time indicator to mark 11am on your charts and have a visual reminder of this rule of thumb.
Click here to view another example of a classic reversal day compared to a non-reversal day.
Good luck with your Emini trading.