Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

Lesson from an Intraday Creeper Trend Reversal on Divergences

Thu, Sep 29, 12:11 PM ET, by Corey Rosenbloom

Previously, I explained what a “Creeper Trend” is, how it develops, and – if you’re willing to feel uncomfortable – how to trade it (it’s not your typical trade set-up).

I wanted to follow-up that lesson with a great example of a “Creeper Trend” formation (trade entry), Trend Reversal (with excellent positive momentum divergence example), and re-formation of a Creeper Trend in the OPPOSITE direction.

While this is your standard “Trend Reversal” example, I wanted to take it a step further and explain it in terms of “Feedback Loops” and “Creeper Trends” which are important but often misunderstood concepts.

Let’s start with the 5-min “bigger picture” structure of Crude Oil at the end of September 2011:

For simplicity, we’ll focus on two main lessons:

  1. The Creeper Trend Move (see “Lessons on Creeper Trend” for detailed explanation)
  2. The Reversal of the Creeper Trend on Clear (Lengthy) Positive Momentum Divergences

The goal is to empower you to spot (and understand) a Creeper Trend in real time and then trade in the direction of the Creeper trend UNTIL a clear reversal signal develops (and what that signal is).

Starting at the top left of the chart, price formed negative momentum divergences, broke under a rising trendline along with the 20 and 50 EMAs, and then formed a “support shelf” above $83.00 per barrel.

Our conversation begins when price triggers a “Sell Short” signal at 11:00am CST with the break under the $83.00 support shelf.

What resulted was a bar-over-bar Positive Feedback Loop that evolved into an infamous “Creeper/Oozing” Trend that didn’t really give traders good entries, exits, or risk-management parameters.

That’s what a Creeper Trend does – it confuses many traders and leaves them sidelined, never quite getting that perfect retracement entry.

Let’s focus our attention on the overnight reversal off of lengthy (persistent) Positive Momentum Divergences (3/10 Oscillator) at the $80.00 per barrel level.

In a Trending Move – including intraday Creeper Trends – we look mainly to EMAs (exponential moving averages) to provide structure and trade entries on retracements.

We also look to these EMAs – I prefer the 20 and 50 periods – for reversal signals when price BREAKS THROUGH these averages.

We confirm the move by assessing the picture from Momentum – namely we want to see lengthy positive divergences AHEAD of a breakthrough.

We also want to see if the oscillator thrusts to a new relative high which accompanies the EMA (or trendline) breakthrough. If so, this is a hidden signal of strength – hidden because traders who are not assessing momentum do not see the “burst” or “kick-off” signal in the oscillator.

A Momentum Kick-off occurs when an oscillator thrusts to a new relative high (preferably off divergences) when price is clearly NOT making a new relative high.

Traders should not remain short after a kick-off signal that accompanies a price breakthrough of a trendline or EMA structure – in fact, this is an aggressive BUY signal to play the potential Trend Reversal in Development.

Traders place stops under the swing low when entering on the Trendline/EMA breakthrough – in this case at $80.50.

An opposing or bullish Feedback Loop (“Creeper Trend”) developed to the upside, resulting in a similar bar-over-bar creeper/oozing price action until price developed a sideways support shelf around 6:00am.

Unlike the prior session, price actually HELD this support shelf, resulting in a breakout “Bull Flag” buy signal… but that’s another story for another day.

For additional reference, here are the 1-min charts that step-us inside both the down-move and the up-move:

Crude Oil’s Reversal Signal and subsequent bullish “Creeper Trend” development:

Lower timeframe charts provide a clearer picture of what we’re seeing on higher frames, allowing us to “step-inside” the price action seen on a higher frame.

The important thing to learn from this reference post is the development/ignition of a Creeper Trend, the Reversal Signal via positive divergences, and the official Trend Reversal that created – surprise – another Creeper Trend situation.

Take time to learn the lessons from clean examples like these so you’ll be better prepared to recognize then trade these situations when they develop in real time in the future (across all markets and timeframes).

I’ll be discussing similar situations/examples as these in my upcoming webinar presentation:

Designed by Traders: Trading Trend Reversals“ October 12, 3:30 CST

Additionally, I’ll be speaking specifically on Trend Days – how to spot them in real time, how to trade them, when to expect them, how to adapt your tactics/trades to them – at the upcoming Las Vegas Traders Expo in November.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey's new book The Complete Trading Course (Wiley Finance) is now available!

blog.afraidtotrade.com


SDI Glossary: "price" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "Short" Definition
SDI Glossary: "Trend" Definition
This Article's Word Cloud:   Corey   Creeper   EMAs   Feedback   Momentum   Positive   Reversal   Signal   Traders   Trend   accompanies   afraidtotrade   another   breakthrough   direction   divergences   example   from   high   important   momentum   move   oscillator   picture   positive   price   provide   real   relative   reversal   shelf   signal   step   structure   support   that   them   then   these   this   thrusts   time   trade   traders   trendline   under   what   when   with   your

| More

Disney DIS Surges to Key Target Price Dec 9
Fri, Dec 9, 12:31 PM ET, by Corey Rosenbloom

Media giant Disney (DIS) surged through a key resistance level at $100 and now achieved ...

Buyers Bullishly Break Emini Higher Dec 9 Update
Fri, Dec 9, 12:21 PM ET, by Corey Rosenbloom

Buyers continued their relentless campaign of accumulating stocks as the S&P 5oo broke to new ...

US Dollar Index Bounces from Our Fibonacci Target
Thu, Dec 8, 12:11 PM ET, by Corey Rosenbloom

The US Dollar Index caught a strong bullish bid this morning, surging up away from ...

Triple Stock Index Check on Breakouts to New Highs
Wed, Dec 7, 2:21 PM ET, by Corey Rosenbloom

Bullish repbalancing plus a powerful short-squeeze is boosting the US Equity Market to all-time highs ...

Dragging the Emini Fibonacci Grid to New Highs Dec 7
Wed, Dec 7, 1:11 PM ET, by Corey Rosenbloom

Buyers continued their relentless campaign of accumulating stocks as the S&P 5oo broke to new ...

Emini Keeps the Bull Market Going Dec 6 Update
Tue, Dec 6, 12:51 PM ET, by Corey Rosenbloom

Today keep the bullish pressure going – so far – on the bounce up away ...

Down Drops the Dollar on Divergences into Fibonacci Target
Mon, Dec 5, 3:41 PM ET, by Corey Rosenbloom

The S&P 500 isn’t the only market you can track using intraday charts and Fibonacci ...

New Lows after Surge for Nat Gas 3x DGAZ
Mon, Dec 5, 12:41 PM ET, by Corey Rosenbloom

Triple-Leveraged ETFs are the wild-west of the short-term trading landscape. You can triple your gains ...

New Lows for Nat Gas 3x DGAZ
Mon, Dec 5, 12:21 PM ET, by Corey Rosenbloom

Triple-Leveraged ETFs are the wild-west of the short-term trading landscape. You can triple your gains ...

Rally off Fibonacci Grid Support Emini Update Dec 5
Mon, Dec 5, 12:11 PM ET, by Corey Rosenbloom

It’s always exciting when price does exactly what it should! Here we’re seeing a rally ...

December 2 Emini Fibonacci Retracement Grid Update
Fri, Dec 2, 1:31 PM ET, by Corey Rosenbloom

After an initial bounce just above our official Emini Fibonacci Target, price appears to be ...

December Downward Emini Retracement Takes Over
Thu, Dec 1, 2:31 PM ET, by Corey Rosenbloom

I’m thrilled to know that logic prevails and price is doing what it “should” at ...

Three Steps to a Trade a Collapse Lesson from Dryships DRYS and Qualcomm QCOM
Wed, Nov 30, 12:41 PM ET, by Corey Rosenbloom

I’m still surprised with how quickly Dryships (DRYS) surged from $5.00 to $100.00 but even ...

Our Make or Break Emini Level Update Nov 30
Wed, Nov 30, 11:51 AM ET, by Corey Rosenbloom

I’m not sure the buyers (bulls) know the meaning of a “pullback” but here we ...

Microsoft MSFT Gently Nudges to New High
Tue, Nov 29, 3:11 PM ET, by Corey Rosenbloom

Software giant Microsoft (MSFT) continue to be a “strong stock getting stronger” as evidenced by ...

Resilient Bulls Emini Fibonacci Grid Update Nov 29
Tue, Nov 29, 2:11 PM ET, by Corey Rosenbloom

I’m not sure the buyers (bulls) know the meaning of a “pullback” but here we ...

QuadMarket Holiday Trend Update Nov 28
Mon, Nov 28, 2:41 PM ET, by Corey Rosenbloom

We’ve seen all markets trend strongly after the US Election and Thanksgiving holiday November events. ...

Back to a Key Pivot Point for Swing Trading Apple AAPL Nov 28
Mon, Nov 28, 12:31 PM ET, by Corey Rosenbloom

Does Apple (AAPL) go higher or lower from $110? Build your next swing trade off ...

Finally Pulling Back from the Highs Emini Update Nov 28
Mon, Nov 28, 12:21 PM ET, by Corey Rosenbloom

Wait, the market can actually go DOWN? I had no idea! If you started your ...

The Emini Holiday Creep Continues Nov 23
Wed, Nov 23, 12:51 PM ET, by Corey Rosenbloom

Breakout? Pullback? Extended Uptrend getting more extended? Divergent Reversal? Let’s plan! Here’s today’s updated Emini ...

US Steel X Surges through Breakout Highs Nov 22
Tue, Nov 22, 2:51 PM ET, by Corey Rosenbloom

Expectations for future “stimulus” and transportation/spending projects from the new Republican administration sent raw materials ...

Yet Another Emini Divergence at the New Highs Nov 22
Tue, Nov 22, 12:21 PM ET, by Corey Rosenbloom

Breakout? Pullback? Extended Uptrend getting more extended? Divergent Reversal? Let’s plan! Here’s today’s updated Emini ...

Emini Breaks on Through to the Other Side Nov 21
Mon, Nov 21, 2:51 PM ET, by Corey Rosenbloom

Breakout? Pullback? Extended Uptrend getting more extended? Let’s plan! Here’s today’s updated Emini (@ES) trading ...

Post-Election Risk Trending Up in Treasuries and the Euro, Down in U.S. Stocks
Mon, Nov 21, 8:11 AM ET, by Bill Luby

You can always tell when the crowd gets long the VIX and ends up on ...

Emini Plays Again at the Highs Nov 18
Fri, Nov 18, 1:11 PM ET, by Corey Rosenbloom

Will it – or won’t it – break through to new highs? Or will we ...

From Speculative Start to Crushing Collapse in DRYS
Thu, Nov 17, 2:41 PM ET, by Corey Rosenbloom

Well that was exciting while it lasted – and it didn’t last long. Shares in ...

Straight Back to the Highs Nov 17 Emini Update
Thu, Nov 17, 2:21 PM ET, by Corey Rosenbloom

We’re back into the 2,180 prior high target and plotting our next move along with ...

Did You Ever Think Dry Could Go this High DRYS
Wed, Nov 16, 12:21 PM ET, by Corey Rosenbloom

The talk of the trading community this week is the impossible, raging rally in Dry ...

Coming Down from the Highs Emini Update Nov 16
Wed, Nov 16, 12:11 PM ET, by Corey Rosenbloom

Though not stellar so far, price is pulling down away from the 2,180 @ES pivot. ...

Might the Financial Stock Surge Stall Today after Huge Rally
Tue, Nov 15, 12:31 PM ET, by Corey Rosenbloom

After the surprise US Election outcome, we’re seeing a flood of money into Financials, presumably ...

Still Hanging Out at the Highs Emini Update Nov 15
Tue, Nov 15, 12:21 PM ET, by Corey Rosenbloom

We’re still seeing price trade at the highs after a sideways pullback instead of a ...

Radical Reversal for Dry Ships DRYS with Bullish Surge
Mon, Nov 14, 3:51 PM ET, by Corey Rosenbloom

It’s not often you see a stock go from beneath $5.00 to $40.00 in three ...

Range Trading at the Emini Highs November 14
Mon, Nov 14, 1:31 PM ET, by Corey Rosenbloom

Our divergences at the high continue to stall the market just ahead of a key ...

Ten Year Treasuries Return to Higher Timeframe Trendline
Fri, Nov 11, 3:11 PM ET, by Corey Rosenbloom

After Tuesday’s US Election, we’ve seen rapid movement in the intermarket landscape. Let’s focus on ...

Another Divergence Reversal at the Emini Highs Nov 11
Fri, Nov 11, 12:21 PM ET, by Corey Rosenbloom

A key pattern – with visual negative divergences – is forming at the retest highs. ...

Emini Divergent Reversal at the Highs Nov 10
Thu, Nov 10, 12:21 PM ET, by Corey Rosenbloom

Additional bullish price action after the election sent us to our prior high target into ...

LABU 3x Biotechs Surges with Bullish Reversal Breakout
Wed, Nov 9, 4:31 PM ET, by Corey Rosenbloom

Triple-Leveraged ETFs offer chances for instant profit – or loss – depending on the outcome. ...

With a Surprise Trump Triumph the Emini Surge Continues Nov 9
Wed, Nov 9, 12:11 PM ET, by Corey Rosenbloom

Markets like certainty – even if that certainty comes at a big surprise to most ...

Top VIX Crushes in History
Tue, Nov 8, 1:21 PM ET, by Bill Luby

Yesterday's sharp downward move in the VIX gave me a reason to tweet that the ...

The Emini Election Day Surge Simply Continues
Tue, Nov 8, 1:21 PM ET, by Corey Rosenbloom

It’s Election Day in the USA and the stock market rally continues in full force! ...

Four Rapid Money Flow Reversals before the Big Election
Mon, Nov 7, 3:41 PM ET, by Corey Rosenbloom

Before Americans go to the polls and select the next president, we’re seeing sudden reversals ...

SPX Sigma and Volatility Chart for November
Mon, Nov 7, 12:31 PM ET, by Corey Rosenbloom

Price cycles between alternating periods of high and low volatility, and if we can assess ...

The Nov 7 Expected Emini Bounce Surges Higher
Mon, Nov 7, 12:11 PM ET, by Corey Rosenbloom

Here we go – after a pullback exactly to our 2,080 target, buyers continued expected ...

The Nov 6 Expected Emini Bounce Surges Higher
Mon, Nov 7, 11:51 AM ET, by Corey Rosenbloom

Here we go – after a pullback exactly to our 2,080 target, buyers continued expected ...

VIX Sets New Record with Nine Up Days in a Row
Mon, Nov 7, 8:11 AM ET, by Bill Luby

Over the course of the past few days I have been tracking the slow grind ...

How to Play a Volatility Spike (Guest Columnist at Barron's)
Sun, Nov 6, 6:11 PM ET, by Bill Luby

Yesterday, I was pleased to once again have an opportunity to pen a guest column ...

The Expected Emini Bounce Materalizes Today
Fri, Nov 4, 1:21 PM ET, by Corey Rosenbloom

Here we go – after a pullback exactly to our 2,080 target, buyers are creating ...

The Dreaded Divergence and Three Push Precede Facebook Fall
Thu, Nov 3, 12:11 PM ET, by Corey Rosenbloom

Price often gives visual signals before reversing, even if in real-time it looks very surprising. ...

VIX Median Reversion and Five-Year Moving Averages
Wed, Nov 2, 1:51 PM ET, by Bill Luby

When people talk about the VIX you often hear them refer to mean reversion, which ...

A Quick Lesson in Divergent Reversals for the US Dollar
Tue, Nov 1, 12:11 PM ET, by Corey Rosenbloom

Many traders love reversal patterns but so many traders get trapped in false reversals in ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

Lesson from an Intraday Creeper Trend Reversal on Divergences | Self Directed Investor | Copyright © 2008 - 2016, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.