How to Use Smash Day Patterns

There are two ways to use these patterns. Let's first look at the pattern in sharp up and downtrends, trends you wish You were in or where you want to add a position. In such tight trend up moves the appearance of a smash down day, hidden or not, sets up our buy for the following day and is precise evidence the trend is intact and ready for traders to have another go at it. another race to the sun.

In a downtrend, the reverse situation will be found to produce excellent indications of when to get back aboard the decline. Here you will be looking for either the naked up close day or a down day that closes in the top of its range. If the very next day prices smash below that day's low. it is time to get short.

The examples shown here should help you understand the importance of this technique. The other way I like to use these smash day setups is to look for a market that has been in a choppy trading range. I then note a smash day and act accordingly once the high or low of the smash day is penetrated. My thinking is that we will probably see a breakout of the congestion if the smash day is immediately reversed. Such action is suggestive of a market that moved to where all the stops were, and elected all the "breakout babies" who had orders there. The breakout is a magnet for the public to take action and they do. What kills them is the immediate reversal the very next day. They cannot believe their "Iuck" and decide to hold on despite the reversal; a few days later, they pitch their positions adding fuel to the move we hooked up with thanks to the smash day pattern.

Confucius must have been a chartist when he said that one picture (one chart) is worth a thousand words. I have marked off examples of the smash day pattern in trading ranges for your study. These appear as Figures 7.12 through 7.17.

2/4/91 2/11/91 2/19/91 2/25/91 3/4/91 3/11/91 3/18/91 3/25/91

Figure 7.12 Comex Silver (daily bars). Graphed by the "Navigator' (Genesis Financial Data Services).

2/4/91 2/11/91 2/19/91 2/25/91 3/4/91 3/11/91 3/18/91 3/25/91

Figure 7.12 Comex Silver (daily bars). Graphed by the "Navigator' (Genesis Financial Data Services).

Smash Day Pattern
Figure 7.17 CBT Wheat (daily bars). Graphed by the "Navigator" (Genesis Financial Data Services).

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  • Valentino
    What are smash bars in trading?
    1 year ago

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