INSIIDE Track Trading


Trend is based on a proprietary price reversal pattern and determines current structure of the market but not necessarily the anticipated action. A daily or weekly trend can NOT reverse immediately from UP to DOWN** -- without first generating a minimum of two NEUTRAL signals in the interim.

An UP/NEUTRAL trend is a trend which was previously in an UP trend and has closed below the neutral point on an appropriate basis (weekly trend must close below the neutral point on a weekly basis, etc.).

A DOWN/NEUTRAL trend is a trend which was previously in a DOWN trend and has closed above the neutral point on an appropriate basis (weekly trend must close above the neutral point on a weekly basis).

[**If a trend reverses from UP to DOWN on the Weekly Re-Lay™ --when one week it shows UP and the next week DOWN -- it means that the market had already generated two NEUTRAL signals, managed to get back above the NEUTRAL point (re-entering an UP trend), but subsequently broke down (without setting new highs in the interim) and closed below the filter (triggering a reversal to DOWN).]

Support/Resistance levels are projected ranges for the upcoming period (day, week, month, etc.) and can be used as the ideal level from which to initiate positions if tested by mid-period (day, week, month...).

Traders who want to trade off these levels should look for corroborating support or resistance and utilize 1-3 day trading signals (if trading off weekly or monthly support or resistance) to initiate or confirm positions.

Intermediate trades average 1-8 weeks in duration. Traders following intermediate (or long-term) trades should disregard long-term signals unless attempting to trade both.

Long term trades are those expected to last more than two months and should be taken or traded independent of intermediate trades.

2-Close Reversal™ is a key reversal (lower low and higher close -- or higher high and lower close -- than previous day) which closes beyond the 2nd close prior (thus reversing 2 closes instead of just 1). This indicator is the trigger signal for aggressive 1-3 day trades.

2nd Close Resistance/Support™ focuses on 2nd previous close as a significant level of resistance/support.

Double-Key Reversal™is two successive key reversals in the same direction. In the case of a high, a market will spike above the previous day’s high and close lower than that day’s close. On the following day, it will again spike above the previous day’s high (the day of the initial key reversal) and again close below that day’s close. This pattern is rare and primarily seen at MAJOR turning points.

Turn-Key Reversal™ is two successive key reversals in opposite directions. In the case of an up-trend, a market will spike above the previous day’s high and close lower than that day’s close. On the following day, it will spike below the second day’s low and close above the second day’s close. A buy signal would be confirmed by a close above both of the two previous closes -- thus creating a 2 Close Reversal™.

LLR, LLS, HHR, HHS, LHR and HLS™are calculations between successive "H"ighs/"L"ows projecting "R"esistance or "S"upport for next tick. The calculation projects the difference between the two recent "H"’s or "L"’s from the most recent. [i.e. HHR = (High 2 - High 1) + High 2 = Resistance for ensuing period... High 2 = current high, High 1 = previous high]

LLH & HHL™ are similar to the LLR and HHS -- just not respective of time.

HHL is the calculation between two successive Highs (#2 high must be lower than #1) used to project a subsequent Low (calculate the difference between the two Highs and subtract it from the second high).

LLH is the calculation between two successive Lows (#2 low must be higher than #1) used to project a subsequent High (by calculating the difference between the two Lows and adding it to the second low).

In either case, the difference can also be multiplied by 1.618 and by 2.000 before adding it to the higher low, or subtracting from the lower high, in order to project two additional levels of resistance or support.

SPR, SPS™ are ‘Symmetrically Projected Resistance/Support’ where the current tick’s range (whether daily, weekly, etc.) is divided in half. The resulting amount is added to the close to determine the SPR™ for the following period... or subtracted from the closing price to determine the SPS™ for the next period.

These preceding levels are most effective and most accurate when tested early in the respective period (i.e.--early in the week if weekly resistance, early in the month if monthly support, etc.). The second most effective time is in the middle of the period (see comments on V and Inverted V patterns).

V/Inverted V™ refers to a mid-period reversal. A Monday High, Wednesday Low, Friday New Intra-week High = V™. A Monday Low, Wednesday High, Friday New Intra-week Low = Inverted V™ . Similarly, an early-month high, mid-month low and late-month new high would be an intra-month V, etc.

X-X™ is a trending week or month (Monday low & Friday high or Monday high & Friday low, as well as early-month low and late-month high or vice-versa).

One variation to this is common in the S+P and involves a sharp move in one direction on Monday (or the first trading day of the week or month), which is quickly annulled by a spike and abrupt reversal on Tuesday morning. The market will then continue in the same direction (contrary to the Monday ‘fake-out’) for the remainder of the week.

MAC , AMAC & MARC (8 High, 8 Low, 21 High, 21 Low, etc) are Moving Average Channel, Adjusted MAC & Moving Average Replacement Channel based on the average of a predetermined number or past highs or lows.

These principles are just that: PRINCIPLES. They should not be treated as the Holy Grail and should only be implemented within the context of a disciplined trading strategy -- where money management should always take precedence! (See Tech-Tip™ Reference Library for add’l details & examples.)

Eric S. Hadik -- Editor ©2009 ITTC E-mail us for more information

INSIIDE Track Trading Corporation PO Box 2252 Naperville IL 60567 630-585-9218/630-585-5701 (fx)

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