It is the first ZL Rejection after a signal. This is the main trades he watches for and takes all day long. It works in any time, volume or tickframe but as stated before he is actually using a t chart.
If you clearly understand that this setup represents a serious pullback in a trending market, you will have for sure a better chance of trading it successfully.
It will basically get you in a trade just when the pullback is over and the trend is ready to continue. What are the conditions for this setup to occur? Remember that if the 50CCI crosses down up through the ZL, as we will see later when explaining 5o34, the uptrend downtrend is probably over. It does not have to be above below for any specific number of bars.
As a matter of fact, it can just have crossed above below one bar ago to meet this condition. Very often the real move begins at that point — when 14CCI crosses the ZL — so you are not missing much of the move by waiting. If 14CCI turns back down up and crosses the ZL to the down up side, it is best to exit because you will have — almost for sure — a loser there.
This will keep us out of bad trades and drop us in right around the time that the up down move is about to continue. Another setup DrBob created and uses is the In this case, the 50CCI crosses up down above below the ZL at around the same time that the price bar crosses and closes up down above below the 34EMA. You will notice many times that a setup is the beginning of a new trend; almost every great move begins with a When do you enter this trade?
In that case you want to go long short. The only and main problem we have with this setup is that sometimes it reverses back through the ZL a few times in a choppy way. For trying to avoid choppy times DrBob has been filtering his signals with longer timeframes, looking at triangles forming on price bars — he does not take a signal if price is consolidating inside a triangle, please refer to Figure 2 and Figure 3 — and avoiding trading when 50CCI is stuck between the lines.
Also, many times you will go long short on a and shortly thereafter the 50CCI will cross back down up through the ZL and price will close below above the 34EMA. In this situation you can reverse your position and go short long or at least you can exit your trade to avoid a sure loser. When works, 50CCI will reach the line pretty quickly.
Now, once 50CCI breaks that line it usually will move fast in the direction of your trade. Please refer to Targets and Exits for this subject on how to find stops and targets by keeping statistics.
If you do not want to work to hard or feel it is too risky to take the , take the first ZL Rejection, using the 14CCI, after that ; this is usually a high probability winner. For increasing odds even more, look for bounces from 34EMA when all these occur. It has been also said that it is even better when Z occurs at the same time a Slingshot dip below zero and return up above for longs and a Plateau Trade are occurring. This is an extra piece of information this writer considers you may have but at the same time it is suggested you do your own research on that affirmation.
These are then the 3 main setups DrBob takes. However, he thinks it is still important for you to know about some other CCI setups that will help you understanding and trading better the setups already explained.
DrBob suggests that we all learn when the shamu usually occurs because it is a very powerful pattern and it leads to a strong move most of the time.
It is important to learn and understand when a ZLR could fail and turn into a Shamu. Normally, you would not take a line bounce, but if the 50CCI is forming a shamu, you may consider it as a trading opportunity. Consider this if you have been burned often taking ZLRs; Dr Bob prefers the dips and hooks at the as we mentioned earlier. Please refer to Figure 8. Many times after having a ghost, CCI will shamu and then fall out of bed.
Many times you may be tempted to trade a ZLR forming after a ghost. Wait, if you do not want to get burned, and better observe and try to anticipate if it turns instead into a shamu. Ghosts on 50CCI are just beautiful. Look for 50CCI Ghosts too. You can use it as an actual entry signal or as an exit if you are already in a trade in the other direction since this is a high probability reversal signal. Be alert that when talking about stops and possible peaks, you have been only offered some examples.
For finding your own trading settings you need to do your own research and create your own database of statistics for the market s you are trading.
DrBob keeps statistics on all the winning trades in the Russell. A winning trade for him, while accumulating statistics, is one that provides a reasonable opportunity of profit based on visual evaluation of the charts. Also for the purposes of collecting and keeping statistics, the peak value is considered the highest lowest point of the move before 50CCI crosses back over the lines.
He sets his targets off of that data. He manages his third contract based on evaluation of the 50CCI above below the line. Many times, he will switch to a longer timeframe, like a 1,v, and wait for a divergence, a counter CCI signal or a cross.
But, this is only if you are trading a multi contracts position. As stated before, he uses a 6 tick stop on most of the markets he trades. When looking at his statistics spreadsheet for , he would have needed a 4. So, according to this fact, if it does not go against you over 5 ticks, it is probably going to be a winner. That is why he uses 6 ticks. Share your opinion, can help everyone to understand the forex strategy.
Shamu DrBob suggests that we all learn when the shamu usually occurs because it is a very powerful pattern and it leads to a strong move most of the time.
Stops As stated before, he uses a 6 tick stop on most of the markets he trades. Adobe Acrobat DocumentMore...