I always approach a swing opportunity as a top. Picking a top can be a slippery slope and as such, any assistance you can get should help so I recommend the $8.95 Market Club Trial Offer to start and keep you swinging successfully... the trade triangle technology is good as it gets for picking trend reversals.
The tops I pick.......... tend to be spiky, and pops the upper bollinger one to three days (on gaps) I usually aim to wait for the backfill to start or a close back under the upper bollinger....!
Only after a swing works it's way into a position that confirms it was a swing, can I call it a swing. You may be able to use the below descriptions to develop skills.
You should view this ADX video... how-trade-trends-using-adx. in order to identify the trend, trend strength and in between trends, if the market is ranging...
Next is an introductory discussion on the bollinger the best as I have seen in less than 5 minutes in this You Tube Video says it all for the way the bollinger is used...... Relative support and resistance in ranging conditions.
View these two links on macd using part 1- macd indicator-part-2 to freshen up...
You should view this learn-trade-stochastic-oscillator-video Stochastic videos..... they refer to the Slow Stochastic, but my own preference is the Full Stochastic 15,5,5.... it reads smoother usually, and displays the crossovers better in my opinion. Try the 14,3 Slow Stochastics and the 15,5 Slow Stochastics... it really is a matter of personal choice. The stochastic is used in combination with a trend line (very important to weed out stochastic fake outs).
As for the RSI...The stochastic indicator is much the same as an RSI, but I prefer to use them both, combining the the MACD with the RSI. you should also refresh your understanding of the relative-strength-index-rsi-trading video.
Once you have that part in your mind.... you need to apply the supporting indicators to confirm a ranging top, or bottom, or a ranging breakout of the range up or down riding the bollinger...
Range picking a top is pretty well straight forward....
However....
In an uptrend... It is not just enough to trade the bollinger top and bottom touch with confidence... you can get in trouble doing that....
I use a trading study called "The Left and Right hand of the Devil" that incorporates the MACD crossovers with the RSI over 70 under 30 extreme readings... they make a good pair of confirmation indicators for extreme conditions.
The study I came up with is comprised of, (However, ...:indicators that your already familiar with may work better for you) and are in this order, as a personal preference, because the positioning of the indicators compliment the surrounding above, and below indicators, present a visual picture that I think supports the best expression as a picture:
1) The default ADX... (Above the price) is the trading indicator which defines the trend strength, and whether the price is ranging OR TRENDING
2) An average study incorporating a 50 day MA... and 200 day MA for the "Sweet Spot Filter triangle trading the bottom pattern" using the 50 and 200 day averages filters out a lot of weak stocks... best used in a broad market or sector upswing.
3) Default Bollinger (20)which includes a 20 day MA for support and resistance entry, and exit in a ranging price. However both the lower bollinger and 20 day average can be levels of support in an uptrend.
(the rest of the indicators are set below in the following order)
4) StochRSI (4 different settings) used to read continuations and read the RSI 14 as well... explained in the study. These 4 indicators are all the same, but the different settings allows for a depth speculation. They are a sub study. The key indicator in the group is the StochRSI (140) such that a move up over 80 under the right supporting conditions, signals a continutation in progress leading to a pick the dip strategy.
5) Default MACD 12,26,9 For trending momentum, crossovers and diversion
(LEFT HAND OF THE DEVIL)
6) Default CMF Momentum to account for accumulation and support MACD trigger line crossovers.
7) MACD 12,26,9 Histogram.....Isolates the histogram, and displays it better (I like it... you may not), and compliments the below RSI.......... (histogram crossovers are in sync with MACD average crosses) so looking at one... you know what the other is doing... just a point of interest. The MACD tends to confirm the RSI in extreme situations better... but still works reasonably in a ranging situation.
8) Default RSI (RIGHT HAND OF THE DEVIL) Best reads extreme tops (over 70) or bottoms (under 30), in between readings are hard to evaluate if they are overbought, or oversold..
9) As opposed to the Slow stochastic in the videos.... I like a Full Stochastic 15,5,5 (rather than the 14,3,3) which both track about the same, but the latter is too squished for my taste as the former 15,5,5 shows a wider more easily seen plot used to pick the top in combination with a break in a trend line drawn as a price overlay for the uptrend, and associated with a double top chart pattern in a lot of cases. the price overlay trend line is important..... The trend line holding... spots fake out Stochastic tops, and when it breaks... the Stochastic top can be considered real. You may not get out on the cusp... but you know where things are likely to be going, even if you get whipsawed a bit in your adjustment exit strategy.
If the trend line is not broken by the price, then the stochastic top is likely a fake out where the stochastic can be read as an oversold/overbought within the trend indication.
Best practiced in an uptrending broad market, or, at least uptrending sector.
So putting it all together Here is a link to the study..... a more detailed description...
The Left and Right Hand of The Devil
As well click on the labels at the bottom of the post to bring up other discussions.
Dave GLTA
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