Okay lets try something simple. No more reversal trading. Ever. Unless its a futures imbalance reversal but even then those are just scalps
Continuation- Higher highs and lower lows + lower highs and lower lows
When is a trend valid? (order of importance)
1. Holding the open price
- When a stock holds its open price the people who entered at that level are sitting pretty for the entire day and that level is arguably the most important level in all trends because so long as that spot is holding then the trend should be trusted.
2. Holding the moving averages and vwap
- Hand drawn trendlines are scary things to work with when trading indexes that have trillions of dollars in them. They can pull back for a very long time and still continue in that same direction.
- 50EMA is the #1 area that a trend must hold for it to be considered a trend at all
- 21EMA this is where trends should retest when breaking the 9ema. As long as its held then the trend can be considered "strong"
- 9EMA when this is held for long periods of time we have an EXTREME trend that is very very very strong
3. Breakings above key intraday levels (ranked by order of importance
- Previous day High/Low
- Previous day close
- Premarket High/Low
4. When is a trend clean?
- When we use previous resistance as support that is when a trend is very clean. Holding above the 50ema all day and never touching vwap while using the 21ema as bear traps for short sellers. Thisis a clean uptrend that have a ton of opportunities to trade.
- This is when a trend is NOT clean. see how we are above and below vwap all day and break the 50ema many many times and each previous support never acted as resistance. it always broke through then found sellers way later on at random periods.