Quebec Canada
Legendary Market Wizard
Experience: Intermediate
Platform: NinjaTrader
Broker: AMP/CQG
Trading: ES, NQ, YM
Frequency: Daily
Duration: Minutes
Posts: 4,537 since Oct 2009
Thanks Given: 4,198
Thanks Received: 6,048
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A very nice setup i like to trade occurs after price makes a huge move out of an area of congestion, price accelerates and volume increases dramatically due to market orders from players wishing to participate and not miss the train. Finally, price hit a wall of limit orders from the other side and price turns around sometimes reversing the apparent new trend or retracing at least 38.2% up to 61.8% of the whole move. Some people prefer to use a moving average as target like a 9 or 13 ema. Others will try to target the VWAP or VPOC or VAL/VAH. Does not matter, you expect a return to the mean or a complete reversal. This can be spotted more easily on a time based chart like a 5 or 10 minute chart with volume at the bottom. We got a few of this setup this week on the indices (ES/NQ/YM).
Here is how it looks. This is an example from someone who was a posting often in stage5 trading room. I do use the same concept but trade it a bit differently as i look at horizontal volume for a second retest. Anyway, the concept is easy to grasp.
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