Look for a false break above or below a previous day's high or low AT THE HIGH OR LOW OF THE WEEK.
Attributes of Day 1:
1. Breaks Below/Above Previous Days High or Low at the high of the week, and the day closes back inside of previous days range.
a. Sub Variation: Breaks through previous days level and days closes above/below that level.
2. Can become a First Green Day or First Red Day (Signal for following day).
3. Day 3 sometimes turns into Day 1 at the close of the day.
Day 2 can be either
1. Continuation in direction of false break; or:
2. It can turn into ...
a.) a First Red Day (FGD)
b.) a First Green Day (FRD)
c.) an Inside Day
d.) a Trend Day
Areas of Interest:
1. High of the Day/Low of the Day (HOD/LOD)
2. High of the Session/Low of the Session (HOS/LOS)
3. Outside Day/Inside Day (Was there a false break?) (Act as Support/Resistance)
4. Low Bear/High Bull (Support/Resistance)
Day 2 Trade Setups:
- Parabolic Trend Trade
- High of the Session/Low of the Session (HOD/LOD) Trade
- High of the Day/Low of the Day (HOD/LOD)
- Low Hanging Fruit (LHF) Continuation (Trend Trade)
Method:
1. Support/Resistance References:
a. Low Bear/High Bull
b. Previous Days High/Low
c. HOD/LOD
2. Measure 3 Levels of rise/fall from Low/High of day for potential strike zone.
3. Use Support/Resistance References as additional confluence.
1. Day 3 is the last day of the 3 Day Cycle.
2. A lot of times Day 3 can turn into Day 1, either on the current day or the next day
3. Day 3 can either become a blow off trend continuation day (in the direction of the trend) or a reversal day.
Trade Setups:
1. Parabolic/Capitulation Trend
2. Reversal HOW/LOW
3. LHF Continuation (Trend Trade)
Areas of Interest:
1. Low/High of week
2. Previous Days High/Low (Support/Resistance/Trapped Volume)
3. High/Low of Day
4. High Bull/Low Bear (Support/Resistance)
5. OD/ID (Outside Day/Inside Day)