“523” Trend Method • Most traders would do extremely well trading the 120-minute timeframe, especially those who combine both daytrading and position trading. • When markets get really choppy, it is beneficial to trade the higher intraday periods, like the 60- and 120-minute charts because the trend is easily identified. • "523" chart format:-- 120-minute chart-- 5, 20 and 34 EMAs-- Volume-- 5 RSI (Wilder)-- Chande Momentum Oscillator (20)-- MACD histogram +2 lines (8,17,9)
“523” Trend Method • The trend is up when the 5 EMA > 20 EMA which is > 34 EMA. • Retracements to rising 20 and 34 EMAs are excellent setups, in addition to consolidations right at or above the 34 EMA, which has turned under or flattened out (reverse for sells). • All of your strategies and sequence apply to this "523" method. • The patterns in this timeframe are clearly defined and because of the longer timeframe have a higher probability. • If you trade individual stocks, as well as futures/index proxies/HOLDRs, you will always find trades if you scroll frequently.
“523” Trend Method • If you take any B/Os to new highs/lows in the 120-minute period, be sure to check the next higher timeframe (daily chart) for any key inflection points. • Initial stops are money stops and best when below both the 20 and 34 EMAs. • Entries using the "523" are often early entries to daily chart setups where your entry point is either above the high or below the low of that signal-bar day. • This is an excellent method to use if you actively trade the major index proxies in your IRA because you get quite a few two - five trade days.