Moving Average Patterns

Patterns for Daytraders

The ability to recognize high probability chart patterns is highly productive for the daytrader. Trading the index futures, which requires much greater accu­racy for entering and exiting trades, is better formulated when knowing if a high probability pattern is forming. Successful intraday trading can be accom­plished with a few simple analytical steps. Being able to analyze the trend of the general market provides a bias to the trading, analyzing market direction should dictate a heavier bias for the long side or the short side during any given day. That analysis may be formulated when analyzing the daily charts, then extrapolating that information into the intraday chart analysis.

Simple logic dictates that the analysis for the market in general is in a downtrend, then the one-minute, five-minute, and fifteen- minute chart analysis should be viewed with more emphasis on the moving averages acting as resistance. As illustrated in the S&P one-minute chart, if a downtrend is the predominant bias for the day, the candlestick investor’s eyes should be oriented toward failures at specific moving averages. This is not high-tech analysis. This is using commonsense and then applying the candlestick signals, along with stochastics and moving averages, to enhance your entry and exit decisions.