Posts Tagged ‘seeker’

An Outlook on the USDJPY: Dual Exhaustion Signals

Friday, March 23rd, 2012

We had an interesting set of events last week on the USDJPY. Both our Seeker and Comber tools, which use different techniques to give exhaustion signals after large moves, but gave separate 13 bar sell signals on the daily chart of the USDJPY…at the same time! This is extremely rare for this to happen and add to the power of the potential reversal. Let’s take a look at the two tools separately and then discuss how the USDJPY has reacted so far.

First, we have our Seeker tool, which gives a reversal sell signal with a red “13″ above a bar. It also draws a pink risk line, which is then used as a stop out point for the short if we close above it. If the pair closes above it, the pink line becomes dashed instead of solid to show that it is broken. We commonly see a signal and then the use of the risk level as strong resistance, which is exactly what we see here:

So far, the risk level has not broken, and the USDJPY is starting to roll.

Even though the Comber counts exhaustion differently, in this case, it got the exact same signal, which means the exact same risk level, so even though the numeric count that gets to 13 is different than the Comber, the sell signal and risk level look the same:

When these two signals line up at the same time, or even one or two bars apart, it creates an even more probably reversal point.

At this point, the USDJPY is just starting to rollover and has established the first 2 bars of a green “setup” count to the downside, which we will monitor to see if it can approach the key 9th bar. At the same time, two targets are in motion. One is the 50% retracement of the move, which is the black line at B. The second, which should not be discounted although it looks extreme now, is the red line C, which is the static trendline of the count itself. Let’s watch for both in the coming days and weeks.

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Introduction to the Tradesight Seeker Market Timer

Monday, March 5th, 2012

The Tradesight SEEKER has been designed to warn traders of high probability inflection points. An effective market timing tool such as the SEEKER has many benefits. It may keep a winning trade in position longer and increase profits or it may spot a reversal point to enter a trade.

All traders are familiar with both the price and time axis on a chart. Unfortunately, many traders under-utilize the horizontal time axis. The SEEKER is a pattern recognition tool that evaluates both time and price.

There are two main components in the SEEKER that represent different phases of a move. The first is a Setup ‘9’ which is momentum based and then followed by a Countdown ‘13’ which is trend based.

The momentum setup ‘9’ evaluates the bars on a chart that first show organized construction. In an uptrend, when a momentum move begins, the first recognized bar will be labeled with a green ‘1’ above the bar. Each successive bar that continues in the momentum move will be numbered until at least 9 bars have been consecutively labeled. Once 9 consecutive bars have been counted, price will typically either pause or retrace. This is useful information for either managing open positions or evaluating levels for entries.

After a momentum move has been identified by the 1 through 9 bar count, the second phase of evaluation may commence. The countdown ‘13’ phase will begin to evaluate the trend and look for construction that will terminate when a total of 13 new candles have met the trend criteria for both time and price. After the 13th bar of the trend phase, traders will be on high alert for significant price reversal.

The two distinct phases of the SEEKER are the setup momentum 9 bar move and then the subsequent trend countdown 13 bar move.

Below is a 65-minute intraday chart of Lululemon (LULU). At the left of the chart there is a 9 bar momentum move (green numbers above candles) that ran for about $2.00 before retracing, consolidating, and resting. After the completion of the 9 bar run, the second phase of the tool began numbering the 13 trend exhaustion move with red numbers. This part of the study ran for about $4.50 before marking the chart with the red ‘13’ and red exhaustion arrow. The ‘13’ trend exhaustion phase reversed price and produced a wave of profit taking. The value of the Seeker here is that it kept traders long and correctly identified the reversal candle on the chart:

Both the 9 bar momentum phase and the 13 trend exhaustion phase of the SEEKER study provide real time objective information. Not only does the study do on the fly intraday reconnaissance, but it works in all time frames all the way up to the large weekly charts. The SEEKER study produced a daily time frame sell signal on 3/1/12.

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AGO Seeker Sell Signal Trade

Wednesday, February 29th, 2012

Tuesday our Seeker tool flashed a sell signal for silver. This was the first sell signal since it correctly identified the top in August last year. A short was called and delivered via our messenger to alert traders to short triple leveraged AGQ<70.67 or the 1x SLV<35.47. The trade triggered and over the course of only about 60 minutes the AGQ moved $10 in our favor.

Here is a 15 minute chart of the AGQ with the trade trigger and subsequent price action:

Below is a look at the daily chart showing the Seeker sell signal generated Tuesday for the AGQ. The candle with the red number 13 and red arrow is the sell signal that alerted us that the trend was ready to change from bullish to bearish:

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NTAP Comber Wall Addendum, The Seeker Variable

Thursday, December 15th, 2011

The other day, I posted an article (which you can read here) about the Comber wall of resistance over a couple of days on NTAP. There was actually another piece of the story that I’d like to point that makes the wall even stronger on the second signal.

Here is a look again at the Comber tool on NTAP, with the second signal in three days marked at B, as discussed in the prior article:

What I didn’t share in the first article is that our Seeker tool produced a 13 sell signal on the same bar, as seen on this chart at point A:

While the Seeker and Comber both share the same setup mechanism on their 1-9 green counts, and while the 1-13 countdown phases can have some similar characteristics, the fact that the Comber 1-13 count reaches back to the start of the setup phase while the Seeker does not means that they rarely give a signal at the same time. In this case, they both did, giving more power to the play and making it more likely to work, which it did that day.

Even more telling is to look at the chart two days later and see what that signal meant to the market:

The power of the Seeker and Comber together at work.

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The NTAP Comber Wall

Tuesday, December 13th, 2011

Something that I’ve come to call a “Comber Wall” is when our Comber tool repeatedly gives sell signals near the same price area on a chart (or buy signals, as the case may be) over the course of several days. This is especially more powerful in cases where there are no signals in the opposite direction in between.

Let’s take the case of NTAP over the last 3 days. I typically focus on a 5-minute chart as it gives you a small enough time frame to work without being impractical.

Here’s the chart of NTAP that I’m referring to:

Now, the Comber counts that matter are the pink (or magenta) counts. When you get a 13-signal in pink, you have an ultimate buy or sell signal. In this case, there are two sell signals over the last three days. One was on Friday, in the latter half of the day. The setup phase for the tool was the black box under the letter A. This led to a Comber count and sell signal at B, which clearly was a top as the stock rolled and then gapped down Monday morning and spent the day at lower prices.

Note that on Monday, even though we had a couple of setup counts, we did not have any of the pink Comber counts complete. Then today, on Tuesday, NTAP rallied again. We got back to the price levels from late Friday and formed another setup box to the left of C. This led to a Comber count and sell signal at D, which led to an even sharply roll.

Note that in this case, the stock had returned to a sell-off point from Friday, tried to get higher, and then got the Comber sell signal. This is what I mean by a Comber Wall. It’s a lot of resistance that keeps showing energy sell signals.

The Comber and Seeker tools remain the most powerful tools for trading out there as far as I’m concerned. They work in all asset class (we teach stocks, futures, and forex) and on all timeframes. The ultimate signals are extremely accurate.

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Tradesight Seeker Example on Daily JCOM

Thursday, September 29th, 2011

I’ve been doing daily highlights this week of the Seeker tool in action in our Market Blog. The last two were about the Seeker in Forex on a 5-minute chart (one FX pair, and one the US Dollar Index).

Today, I wanted to back the tool out a bit and show it on a longer term timeframe, which is the daily chart. We’ll use JCOM, which is a short idea today from a breakdown perspective, but already did a lot of great work with the Seeker.

Let’s start back in August when a new Seeker upward count began. Here it is only 2 bars in so far:

Now, we achieved 9-bar status 7 days later:

The red line is thus the “Static Trendline” of the Setup count, which means that it is the lowest point during the setup phase, and it can be a “trade to target” if the stock reverses. The red line is $27.18.

Another note is that even though we got the 9, the lookback criteria for the setup phase continued for two more bars. Once that fails, the tool draws a dashed box around the whole Seeker setup, what I call “box completion”:

The concept from here is that potentially, the high of the range of the box with a Setup complete is resistance. Energy has run out. You’re looking to get short up in that area. There are a variety of methods to pick the exact entry (wait for a retest of the highs, go short if the stock breaks the low of a prior day, etc.). Any of these gets you short up in this area, and the stock continued to find resistance up there for two weeks:

Finally, it starts to rollover:

Note that in the process, a 9-bar setup to the DOWNSIDE is forming, which means that if we are short, a place to cover might be if we get the 9 bar down move, which would then suggest exhaustion to the downside:

What’s amazing and shows the precision of the tool is what happens in the next few bars. The 9 count completes, and the stock reaches down to $27.20, two cents above the red Static Trendline, before bouncing:

Talk about a “trade to target.”

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Another Tradesight Seeker Tool Example

Wednesday, September 28th, 2011

I’ve talked to a lot of people lately who are impressed by the Value of the Tradesight Seeker tool. Although it is ultimately the red 13-bar counts that give solid buy and sell reversal signals, the reality is that you can often find key market inflection points from the green 9-bar setup phase.

Let’s talk about the US Dollar Index. If you are trading Forex pairs, it’s typically useful to watch the US Dollar Index. Our courses teach a variety of tools to watch the Index and monitor it’s direction, which offers a “top-down” look at what to expect from USD-based Forex pairs at the time.

But how does the Seeker tool work on the US Dollar Index intraday, let’s say on the 5-minute timeframe, which is my most-used timeframe? Let’s have a look at the price action from Tuesday night going into Wednesday on it with our Seeker tool (and market directional tool, which are the various green and red lines):

Remember, green numeric counts, which must be in sequential order, are the Setup phase of the process. If you don’t meet the look back criteria for all 9 bars, the count is erased, so on that chart, you only see the completed setup phases for the session. There were three.

At point A, the market had bounced a bit off of lows and approached the mid-point (red line) of the session. That completed count was exactly a top.

At point B, we had extended sharply to new lows. That completed count was exactly the bottom.

There were no more completed counts for seven hours until late in the Forex trading day around 11 am PST (charts in PST). Then we had another 9-bar setup count, which topped at C and was the high.

It is extremely hard to suggest that this tool isn’t something that can put money in your pocket when you see it work like this on so many symbols in all asset classes and all timeframes.

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Profitable GBPUSD Seeker Sell Signal

Tuesday, September 27th, 2011

We’ve had a lot of interest in our Seeker tool lately, so I wanted to take some time to walk through a 13-bar Signal on today’s GBPUSD 5-minute chart to show how the tool can be used.

We’ll start with a look at the GBPUSD around 6:00 am PST / 9:00 am EST this morning (charts are PST). It is currently 7 bars into the SETUP phase of the Seeker tool, which are the green numbers. Once you get to 9 (see recent course for the count methodology); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES the setup is complete and in place:

A few bars later, we get the 9, so the Setup is in force. The red count is the actual Seeker Countdown using a non-sequential 2-bar look back from close of the bar to low of the bar two bars back. Note that the red count begins as soon as the green 9 is complete:

Also, understand that the 4-bar look back count that is used to generate the 9-bar green setup phase can actually continue beyond the 9th bar. Although you don’t need those additional bars (i.e. they are not labeled 10, 11, etc.) for the red Countdown to begin, our tool draws a box around the setup count once the 4-bar look back is broken. So in this case, the Setup count methodology continued for four bars after the 9, and then the box is drawn:

Moving forward, we now see the red count underway. Remember that this count does NOT need to consecutive. Also the red line D is the Static Trendline of the setup count, which is the low of the range of that count:

Seeker signals are a test of patience. This one proceeds fairly quickly but still takes over an hour to get to the 10th red count. 3 to go at this point:

Finally, we get our 13 signal, which is a sell signal by default. You’ll also see that the pink risk line begins to draw after that. Basically, the trade is to sell short at the 13 (or if you want to be conservative, sell when you break the low of a 5-minute bar after the 13) with a stop over the risk level:

The risk line is F, and the GBPUSD starts to roll without touching it:

Over the next 30 minutes, it works nicely as we shuffle into the end of day:

Ends up being about a 50 pip winner at that point. Hard to complain, and very easy to follow if you have time to watch. Note that this tool works on all asset classes and all timeframes equally.

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Story of AAPL on Friday

Friday, April 29th, 2011

Let’s examine from a technical perspective what happened today on AAPL as it relates to Gap Fill Thresholds, Seeker Counts, and index rebalancing. AAPL lost size in the NASDAQ index, which rebalances over the weekend, which means that funds have to sell some of their shares.

First, here is how AAPL starting Friday, with an A over the first 5-minute bar. Note also that the red line from the prior session was the lower Gap Fill Threshold from that day, which the market used very specifically:

AAPL gets off to a strong start in the morning and runs up toward the upper Gap Fill Threshold (green line) in the first 30 minutes or so:

This is first resistance after that move. As trading continues, that level becomes more solid resistance:

And even moreso after a couple of hours:

When it finally does break through, we get an upside move that leads to a 9-bar Seeker setup count, although that doesn’t have to be the high of the move:

In fact, as long as the 4-bar lookback mechanism remains in place, the energy can continue, which it does until we break the lookback and close the Seeker setup box, which produces the high:

Note that the actual 1 to 13 Seeker count is now well underway (which starts after the 9 ends); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES and this ultimately leads to a 13 bar sell signal late in the session:

How well does that line up with what happens? Pretty well, as AAPL crumbles on late selling due to the rebalancing:

All of this was led by our technical tools for the session, even if the rebalancing situation is a little unusual.

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NZDUSD Signal with the Seeker and ADR

Friday, March 25th, 2011

Let’s have an educational discussion about the importance of lining up key tools where we can measure turning points in the market from energy construction and really apply them when the market hits a major support or resistance point. We view the start of the Forex session as 5 pm EST, which is 14:00 on these charts on Pacific Time. Here is the first several hours of the NZDUSD action Thursday evening from the start of the session through the first few hours of the European session:

Clearly, the activity picks up with the European session start. We like to see volume and activity for the purposes of spotting trade setups. One of key tools, the Seeker, measures market energy by using a specific bar counting mechanism. After we get 9 bars that meet the counting criteria in one direction, we then look for the counting mechanism to terminate. When that happens, the tool draws a dashed box around that area of the chart. This represents a potential exhaustion point in the market. So let’s see how this plays out now that activity has picked up for a few hours with the European session:

At this point, we’ve already had one box completion where the NZDUSD met our count criteria and ran in to R1 from the Pivot series (blue line). You can use this as a short entry in the market, and for several hours, the market doesn’t head higher, so the energy was exhausted. Then, the market starts to head up again and we get another 9 bar count that leads to the completion of another Seeker box. This time, it is lines up against the dashed green line. What is that green line? That is the Average Daily Range high boundary for the NZDUSD. What that means is that the NZDUSD currently has traded an average of 93 pips per session over the last six months. At that green line, the distance from the low of the session (back near the start at 5 pm EST in this case) to the green line is 93 pips:

It often matters by itself, but in this case, we’re also hitting that key area that means that the market has covered the range that it covers on average at the same time that the Seeker tool is getting an exhaustion signal. Again, that gives us a short entry with a stop a little bit over the highs. And how does this work? Let’s see the rest of the session:

A 50-pip move back to the VWAP. The combination of the Average Daily Range line with our Seeker signal gave us two trades. One stopped for a small loss, and the other worked for 50 pips.

If you haven’t yet taken a 2-week trial to our services, you can do so here for only $2.97. This includes our Trading Lab with 5 analysts that trade every day for a living, so you can get top-notch guidance, trade calls, and ask questions regarding trades in all asset classes.

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Using The 24-hour VWAP Tool for Forex Trading

Thursday, December 16th, 2010

There are a variety of ways to use the 24-hour VWAP (Volume-Weighted Average Price) as we teach it. This is a unique tool to Tradesight in the FX arena (although commonly used in stocks and futures). The importance of the VWAP level as it moves throughout the session can never be overstated.

One of the ways to use the tool is to wait for the market to start to get a move and have it bounce once or twice off of the VWAP. Once that happens, you know that the market has addressed the VWAP for the evening and is using it. This happened last night fairly early on the GBPUSD. Keep in mind that these charts are MST time zone, so two hours earlier than EST.

As you can see here, the GBPUSD got two bounces precisely off of the purple VWAP line at point A, just as it was starting to curl up:

From this point forward, each TOUCH of the VWAP can be traded by then buying if the pair trades above the high of the 5-minute bar that touched the VWAP or shorting if the pair trades below the low of the 5-minute bar that touched the VWAP. So, here’s the next touch of the VWAP an hour later, and I’ve drawn black lines at the high and low of that bar:

In this case, it turns up, and the buy point is the black line, but you can see how it played out, running up about 30 pips and stalling at the Value Area Low level:

About an hour later, we roll back to the VWAP and get another “touch” bar, and I’ve marked off the high and low again:

The next move takes out the high of that bar:

And that leads to…another run up just over the highs of the prior push and another winner:

SIX HOURS later, the GBPUSD comes back down to the VWAP and touches it. This charts shows the “touch” bar and then the next bar, which triggers to the short side by moving under the black line:

This leads to about a 25-pip move downward to the LBreak level. Note that we get a 9-bar Seeker setup on that move down against the LBreak red line, which coils the spring for the move back up:

And that move back up looks like this:

Very technical action all night on the GBPUSD despite light ranges.

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