Pivots, Patterns, and Intraday Swing Trades: Derivatives Analysis with the E-mini and Russell Futures Contracts, + Website

CHAPTER 8

Persistent Trend Day

In order to simplify an interpretation of the chaos otherwise known as the trading day, its seemingly unending variations in behavior patterns can be described under three broad categories: Persistent Trend Day, Test-and-Reject Day, and the Split-Open Day.1 Within each of these categories, separate trade strategies are best employed for each model. Trade entry models that work in one of these Day Model Patterns must be avoided in another, and without an acknowledgment that one or the other of these patterns has taken hold, the chance of getting in sync with the best trade opportunities of the day is reduced. Although many trade entry models actually appear in the 1st Frame before the potential day model is understood—especially those associated with the Opening Range Bar (ORB)—the faster the day can be identified according to one of these pattern categories, the better the chance to capitalize on the opportunities the whole day offers. In other words, many valid trade entries taken around the ORB may, in fact, end up being identified later as having been countertrend, but the better trade opportunities will always be those taken in sync with the eventual trend outcome of the day.

For the chief characterizing feature of any Day-Model Pattern, we turn back to the fundamental key of the ORB. In general, price can be said to be either repelled by the presence of the Opening Range or attracted back to it. Eventually, the trend action of the day will commit ...