Sunday, May 27, 2012

Trading Plan: Squeeze

The bollinger band squeeze Indicator (red dots on the osciallator) is the perfect addition as it can filter out trades that happen during choppy market periods. Together with the ADX indicator that can tell me if a move will be just go to the next target or if the trend will last longer my trading tool box is complete.


on 10 min charts either a DP area or a oscillator chance will signal trend reversals:
if adx is below 20 expect a longer trend, above expect reversals
The elliotwave signals (TS1, TS3) can be ignored if the momentum is clearly pointing
in the other direction and the ADX is still below 20:
its better to take only signals once the squeeze is on and not take automated trade signals in
correction times, but it is valid to take short trades below a red 3 min box if the oscillator is positive and goes down again (vice versa for longs):
also looking at the 3 US indicies just because the NQ exited the squeez for 2 bars does not give a valid signal as the other indices are still in correction mode:
so best method is: waiting for a squeeze to happen, then going short or long depending on the osciallator:
although its possible to trade countertrend signals in DP areas if the ADX is high, the safer trade is to wait for a squeeze to fire of and then enter on a pullback
speculating on a long move is also possible if the oscillator is close to the 0 line and a squeeze was not fired off yet.

euro squeeze off can signal other markets (crude oil, gold) to go long as well:


After Squeeze Off enter short on a lower RED bar and long above a higher Blue Bar





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