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Brian,
The 3/10 Oscillator, when properly used, will help with what you're
trying to do. It is a very simple indicator, constructed by subtracting
the 10 period EMA from the 3 period EMA. Use it on whatever principle
timeframe you trade (I use it most often on 5 minute bars). Look to
identify instances of Oscillator Divergence or Momentum Confirmation as
described at http://www.PatternTrapper.com/guide.shtml#310
Its not foolproof, sometimes giving false signals when the larger trend
is particularly strong, but if used in combination with good tape
reading skills and appropriate identification of potential support and
resistance levels, it can become an important addition to your trading
tool kit.
Hope this helps.
Bob Hunt
THE PATTERN TRAPPER
E-Mail: RHunt@xxxxxxxxxxxxxxxxxx
Web Site: http://www.PatternTrapper.com
Phone: 612-892-5550
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Brian Keith Voiles wrote:
>
> Is there a simple way to measure the momentum or strength of any
> given move in the S&P?
>
> For example:
>
> I day trade the S&P. Let's say I'm long from 1420 with a sell stop at 1415.
> And let's say the long position is going my way... and its presently up to
> 1426.8.
> Then suddenly, there is an attempt to turn the price action down (because I use
> candlesticks, I watch the price action... and if there's a doji or VTop
> candle that's
> about to close... that's an "okay" indicator that a reversal could happen).
>
> What I want to "know" is what's the best way to measure the strength of that
> potential reversal... how can I measure it's momentum or potential strength
> well
> enough to know that it's time to take the profits out of the market... or
> if I should
> just tighten my stop (my experience suggests I shouldn't move the stop any
> closer
> than $1,250... otherwise if the trade turns into a nice up move chances are
> I'll
> get stopped out and "miss" the move even though I locked in some small
> profits).
>
> I'd like some assistance in finding an indicator that will accommodate one
> of my rules,
> which states:
>
> "When price action shows a potential reversal, but the momentum of the
> reversal is weak,
> allow the reversal bar to close, then move the stop loss up to 5 points
> away from the close
> of the potential reversal bar."
>
> Any advice from experienced pros is welcome. Thanks.
> Sincerely,
> Brian Voiles
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