The kick-off concept is based on the “sign of strength” concept from Richard Wyckoff to describe a strong initial impulse off a market low that is often the start of a new short-term trend. I labeled these factors on the 1-min chart which helps clarify divergences:ĭivergences are common in trending markets (a divergence also took place at 11:30 am), but price did not move to step two or step three by breaking the 50p EMA nor creating a kick-off signal.Ī kick-off occurs when price is coming off an intraday low and TICK or the momentum oscillator pushes to new swing highs or even new intraday highs (particularly with TICK). While it’s not necessary, if these chart factors form off a known support level (especially from a higher timeframe or “round number” level like $142), it can increase a trader’s confidence that a reversal may be occurring and thus allow for a more aggressive reversal play. A firm breakthrough of the 50-period EMA (5-min) or other trendline resistance.Strong impulse up in price, which is confirmed by TICK and Momentum (a “kick-off”).Positive Divergences (TICK and/or Momentum).The momentum oscillator and the NYSE TICK are used to highlight any divergences with price along with any strong impulse or “kick-off” signals (discussed shortly).Ī bullish intraday reversal tends to have three main steps: The moving averages provide structure (suggesting retracement strategies while price remains trending under these averages, as in the case of the red highlights and arrows at 11:00 am CST and 11:30 am CST). I’m also showing the 20 EMA (green), 50 EMA (blue), the 3/10 momentum oscillator, and the NYSE TICK for indicators. I’m using the SPY as a reference but you could convert the same logic to the futures or any stock or ETF that you trade. Here is the SPY – S&P 500 ETF – on the 5-min intraday frame: Let’s review the steps a market tends to take prior to an intraday reversal and highlight the opportunities that present themselves.
#DAY TRADING REVERSALS HOW TO#
Trading trend reversals is one of his favorite set-ups, and here, Corey Rosenbloom of shares how to recognize the signs and strategies for trading them.ĭecember 4th’s intraday trading session provided an intraday reversal opportunity and I wanted to take a moment to review the main lessons in anticipating-in real time-and then trading an intraday stock market reversal.