262 READING PRICE CHARTS BAR BY BAR
from the First Bar long, he would have missed the entire swing because
there were no pullbacks. However, if instead he looked at the I-minute
chart, there were three High 1 setups (Bars A, B, and C) where he could
have entered. However, never look at the I-minute and suddenly realize
that those are reversals that can be shorted. You looked at the I-minute for
one reason only . . . to find High 1 and 2 long entries because there were
no pullbacks on the 5-minute. Trading Countertrend on the I-minute will
cost you money. In fact, those three long setups are at exactly the price
that the I-minute shorts would cover, and as they cover, they will become
additional buyers, helping to drive the market up.
.. .. ... --- '-*" ... - "' . II . CI • • • • • '1 '1' '1' =!. m �'1 eaiCii'D !W �. ��Tt �
• ." . e o o . ' I!I r:# ,' r# � _ � � .&. fI/
.1�- , IN'n-N-�AIOA·OM:Ial.-t17_2.1�) .1.""."... W'"lfI MAX tM1m (CSoM,.tOJ In.t4 • . � al lII .-,'tf
· 1 . NAtOAQ L-t72.'3 -1... ..
iii '
FIGURE 1 0.3 Only Consider Trad i n g the l -m i n ute Chart in the D irection of the
5-minute Trend
This I-minute chart in Figure 10.3 of AAPL during a strong bear trend
day offered three good shorts at the gO-bar EMA (equivalent to the 5-minute
20 bar EMA) with low risk (the height of the bar). The thumbnail shows the
strong 5-minute bear trend.
The top chart in Figure 1 0.4 is a 5-minute chart, the middle has 1500
ticks per bar ( 1 ,500 trades per bar), and the bottom had 20,000 contracts
per bar (the bar closes on the first trade that makes the volume 20,000 or
more contracts since the start of the bar). They have similar price action
and all are tradable but since the highest volume takes place in the first
hour or so, the tick and volume charts are skewed, with many more bars
per hour earlier in the day and in the final hour.
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Reading Price Charts Bar by Bar_ The Tec ( PDFDrive )
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