Market Tells

Exerpts from Advanced Swing Trading by John Crane

PEG-LEG

a. Market make a new 20 day low. This new low must be at least 3 days after the previous low.

b. It is best if the market close below prior low.

c. When this new high is made, place a buy stop just above the high of this new low day.

d. If filled, place a protective stop just below the low of this new low day.


GAP AND GO (Kicker Candle - Abrupt change of sentiment, usually by news)

a. On Day 1, the market need to trade lower than previous day's low and close lower than the opening price.

b. On Day 2, the market needs to open higher than the closing price of Day 1 (Gap open). In addition, the entire trading range of Day 2 should be above closing price of Day 1.

c. The closing price of Day 2 needs to be above the high of Day 1.

d. If this condition is met, place a buy stop above the high of Day 2.


GAP REVERSALS (Belt Hold Candle)

a. On Day 1, the market needs to make a new low that is below the low of the previous day.

b. On Day 2, the market needs to open lower than the previous day's low and close higher than its opening price.

c. The opening price of day 2 should be at or very close to the low of the day.

d. If the first 3 rules are met, place a buy stop above the high of day 1.


STRONG ADVANCE (occur near support and resistance)

a. In an uptrending market, Day 1 should close lower than opening price (against trend).

b. On Day 2, the market should close higher than opening price (same direction as trend).

c. On Day 3, the market should close lower than the opening price (against trend, similar to day 1.)

4. On Day 4, place a buy stop above the high of Day 3.


MAJOR REVERSAL

a. The market needs to make a new 10 day low.

b. As it heads into Reversal date, the market needs to close lower than the opening price for at least 3 days in a row. (3 black candles)

c. After the close of the third day or before the opening of the fourth day, enter a buy stop just above the daily high of Day 3. Leave it for 2 days.

d. If the market does not trigger the buy stop and the market closes lower than the opening price for Day 4, reenter the buy stop above the high of Day 4.

e. Repeat step d if needed.

f. If the buy stop is hit, place protective sell stops below contract lows.