Dowscalper Dow Emini Futures System
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The example above shows a Fractal pattern formation from the Nasdsq Emini futures (NQ) 610 tick chart. On March 29, 2007, NQ futures were in a downtrend all day and lost over 20 points. At about 2 30pm, NQ made a series of higher-highs followed by two lower-low bars to form a Fractal. This Fractal suggests that a down-trend may be over and a significant trend change may be in the works.
The example above illustrates a bearish Butterfly pattern from the Dow Emini futures (YM) 30 minute chart. YM formed a bearish Butterfly pattern from January 16, 2007 to January 17, 2007 between the 12500 to 12660 levels. After completion of D level at 12260, a reversal bar (wide range bar or lower-low bar) is anticipated to signal a short trade.
Pit traders use Globex or overnight trading information extensively to determine key market trading levels for the current trading day. Globex trading hours start after the regular markets close and end before the regular markets open. For example, the Russell 2000 EMini futures on Chicago Mercantile Exchange (CME), the regular market hours are from 9 30 am ET to 4 15 pm ET. Globex trading hours for Russell 2000 futures starts at 4 30 pm ET and ends at 9 29 am ET. Similarly, the Dow Emini futures on Chicago Board of Trade (CBOT), has regular trading hours from 9 30 am ET to 5 00 pm ET. The Globex trading hours for Dow Emini futures are between 5 01 pm ET to 9 30 am ET. Globex pivots are for the overnight trading range. Globex pivot levels act as key resistance and support levels. They are mostly effective during the first few hours (until lunch hour) of trading. The example above shows the Russell Emini futures (ER2) from the 30 minute chart (24 hour chart). Globex high, low, Globex...
The example above shows a Symmetric triangle formation from the Russell Emini (ER2) 610 tick chart. On May 31, 2007, ER2 made lower highs and higher lows to form a Symmetric triangle. Late afternoon, ER2 prices rallied and closed above the top trendline to confirm a Symmetric triangle . On the following day, ER2 traded higher from the breakout to reach the target levels.
The above example shows an Ascending triangle from the Russell Emini (ER2) 5 minute chart. On February 01, 2007, at around 2.30 pm, after few failed breakout attempts, the price closed outside the upper trend line. A trade is triggered above the high of the breakout bar at 809.6. A stop order is placed below the low of the last swing low at 808. The depth of the triangle is 4 points. Targets are set for 50 of depth (2 points) at 812 and 100 of the depth at 813.
The example above illustrates a Bear flag formation from the Nasdaq Emini futures (NQ) daily chart. In March 2005, NQ made a swing high (A) and by late March 2005, NQ prices sold-off to 1580 level. A retracement of 38 into the AB swing (at C) formed a Bear flag . A breakdown bar (in the prior down trend direction) below the trendline (at C) gave a short trading opportunity.
The example above illustrates a Rising wedge pattern from the Russell Emini futures (ER2) 610 tick chart. ER2 made a Rising wedge pattern in a downtrend. The pattern suggests a pullback rally in downtrend. ER2 made higher highs and higher lows with trend lines connecting in an angle suggesting a potential opportunity for a short trade when prices close below the trend line.
The example above illustrates a Falling wedge pattern from the Russell Emini futures (ER2) 5m chart. Falling wedges are bullish patterns. On January 22, 2007, during the afternoon's trading, ER2 made lower highs and lower lows to form a wedge pattern. On January 23, ER2 traded higher and closed above the trend line.
The example above shows a continuation Diamond pattern from the daily Dow Emini futures (YM) chart. In March 2005, after making a swing high of 11460 (A), YM corrected and declined to 10500 (B). While correcting, YM paused and formed a Diamond pattern from mid March to April 2005.
The example above shows A Rectangle channel formation from the Dow Emini futures (YM) 30 minute chart. The first Rectangle channel pattern was confirmed in early October as it closed below the lower trendline. But there was no trade triggered as prices never traded below the breakdown bar's low. On October 3, YM traded higher and closed above the upper trend line to confirm a Rectangle channel breakout in prior trend. A long trade is entered in the direction of the prior trend before the Rectangle formation (up side). A stop order was placed at the center of the channel. A target is set at the height of the Rectangle channel from the breakout level. The following week, a second Rectangle channel emerged with a similar long trade setup.
The example above illustrates a Donchian Channel trading system from the daily Russell Emini (ER2) chart. In mid May 2006, ER2 triggered a short trade as it closed below the 4-week Donchian price channels at 755 levels. The Average True Range (ATR) in mid May was 12 points.
The example above illustrates a Broadening swing trade from the Russell Emini (ER2) 15 minute chart. The ER2 chart shows two significant swings in a broadening channel as it made higher high swings and lower low swings. After two complete swings, ER2 presented an opportunity to trade the last swing from 4 to 5. When prices reach the bottom trend line at marker 4, wait for a reversal bar (close above previous high) before entering the trade.
The example above shows a Broadening bottom pattern in intra-day trading from the Dow Emini futures (YM) 610 tick chart. On May 06, 2007 Dow futures sold off and closed at 13100 levels. On May 07, 2007, YM attempted for a brief rally but continued its prior trend and closed at 13090 (2). YM attempted another rally to close above prior swing high (1) and sold off again to close below prior swing low (2) at 13080 level (4). The intra-day swings gave a Broadening bottom trading opportunity for the 5th swing.
The chart above shows a LRC pattern from the Russell Emini (ER2) 610 tick chart. On Jan. 16, 2007, ER2 sold off during the morning trade and closed near 798. At lunch hour, ER2 formed a LRC from 798 to 801 as prices tried to recover and traded higher. Around 12 pm, ER2 continued its prior down trend and closed below the LRC.
The example above displays a Pitchfork formation from the Russell Emini (ER2) 30 minute chart. The basic premise of Pitchfork trading is that prices trade from support to resistance in a channel format. In the example above, the swing pivots, A, B and C are identified and a Pitchfork is plotted to show the support and resistance areas. On January 10, ER2 reached the lower trend line support at 779. A long trade is triggered at 780 at point 1. A stop order was placed below the trend line. The first target is the median line at 788. ER2 rallied through the target level and closed at 796 (upper trend line). Next a short trade was triggered at point 4 at 805. A stop loss is placed at 807. The target was set at median line (at 799). This short trade continued to trade below the lower trend line (at point 5).
The example above shows a Cup and Handle pattern formation from the Russell Emini (ER2) 30 minute chart. In January 2007, a Cup and Handle pattern has formed after ER2's uptrend. During the Cup formation (January 24 to January 29) the Cup pattern made highs at 798.6. A Handle part is formed from January 29 to January 30th between798 to 792. On January 31st, prices closed above the high of the Cup level at 799 to signal a long trade.
The example above shows a Head and Shoulders pattern formation from the Russell Emini (ER2) 30 minute charts. From January 11 to January 17, 2007, the pattern formed Head and Shoulders pattern. A neckline was drawn connecting the bottom of the two shoulders to signify the potential breakdown trade. On January 18, ER2 closed below the neckline to confirm a breakdown.
The example above illustrates a Crown pattern from the Russell 2000 EMini futures chart. On April 04, 2007, during the morning session, ER2 traded higher and formed a Crown pattern based on Fibonacci ratios. The pattern continued its down trend after trading below recent swing low at 817. After a series of spikes, a short signal was triggered below the first swing low at D level.
The chart above shows Globex pivot values from the Dow (YM) Emini Futures 15 minute chart. The chart shows January 22nd and January 23rd Globex pivots. On most trading days, when markets trade through Globex lows, it strongly suggests a weaker market, and when markets trade above the Globex highs it suggests a stronger market. On January 22nd, YM traded below the Globex low during the first hour at 12600 and traded all the way to a low of 12500. On January 23rd, YM traded above the Globex high during the first hour (above Globex pivot 12540) suggesting higher values for the rest of the day.
The above example illustrates a 1-2-3 Bullish pattern setup from the Russell Emini (ER2) 30 minute chart. ER2 made a new low at 724.5 and reversed its trend to the upside and traded above the trend line. After a few bars, ER2 tried to retest the lows at bar (2). At bar (3), ER2's prices reversed and traded above the recent swing high to trigger a long trade.
The example above illustrates a Round top pattern formation from the Russell Emini (ER2) 610 tick chart. From April 16, 2007 to April 18, 2007, ER2 made a Round top formation. On April 18th, ER2 closed below the key support areas of Round top formation to signal a short trade.
The example above illustrates a Double top formation from the Russell Emini 610 (ER2) tick chart. ER2 formed a Double top pattern on April 3, 2007 near the 819.5 level. The next day, ER2 started to decline from the Double top level and closed below the swing low of 816.5. Price closing below the neckline signaled a potential short trade. The depth of the Double top is 2.5 points.
The example above shows FibZone pivots plotted from the Russell Emini futures (ER2) 610 chart. Fibzones are plotted at the end of the day for the next trading day. On February 6th, ER2 sold-off and found support near the support band between the S50 to S62 range. In the afternoon, ER2 rallied back from support band (A) and closed in the resistance band (B). The following day, ER2 had a brief sell-off to the pivot point (C) and rallied to the resistance band (D). The first test of resistance to the rally came in the afternoon at 100 of range test E. A pullback to the resistance band-R50 to R62 is expected after the morning rally to (F). Another continuation of the rally, sent prices to 138 of previous day range above pivot level (G).
The chart above illustrates an example of trading Fibonacci ratio levels from the Russell Emini futues (ER2) 610 tick chart. One of the effective method to trade Fibonacci levels is to trade pullbacks in the direction of its primary trend near the Fibonacci retracement levels. For the first swing at AB, trade reversal occurred at the 61.8 retracement level. A long trade is entered at C with a stop order placed below A. On the second swing at CD, a long trade is entered at the 61.8 retracement level. The swing retraced to E to 78.6 , but rallied back into DE swing. For the second trade, a stop order is placed at C. Targets are set at the top of swing highs at A, D, F and H.
The example above illustrates a Double bottom pattern formation from the Dow Emini futures (YM) chart. YM made a double bottom from June, 2006 to August, 2006 at the 10,800 level. The Double bottom pattern is relatively easy to trade. A long trade was triggered at the breakout of the swing high (at level A 11,500).
The example above illustrates a Matching Highs pattern from the Russell Emini futures (ER2) 610 tick chart. On March 26, 2007, ER2 rallied most of the day to form a top at the 815.5 area. Late in the afternoon, Russell formed a Matching Highs pattern for a series of bars to suggest a potential short trade. The chart above illustrates an example of a Matching Lows pattern from the Russell Emini futures (ER2) 610 tick chart. On April 5, 2007, during the morning trading, ER2 formed a matching lows pattern at 815 area to suggest a potential long trade. Wait for a breakout bar to confirm higher highs before placing a trade.
The chart above illustrates a Bull flag trade from the Russell Emini futures (ER2) 610 tick chart. After a rally from A on January 15, 2007, the ER2 made a swing high at B and formed a Bull flag with a series of higher highs and lower lows . A late day rally triggered a breakout from the top trend line as prices closed above the previous swing high at 797. A long trade is entered with a stop order at 795 (below level C). Targets are set at 70 to 100 of the AB range from C and 138 to 162 of the AB range from C .
The example above illustrates a Triple top pattern from an intraday Russell Emini futures chart. On February 28, 2007, Russell made a significant Triple top at the 798 level and was hesitant to cross at the 798 level. On its third failed attempt to close above 798 failure, the pattern suggested a potential short entry.