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Monday, May 25, 2009

Another Simple Way To Trade a Trending Day

Thursday’s Most Perfect Trend Day Ever

Mar 12, 2009: 9:07 PM CST  from Afraid to Trade.com Blog by 

Granted - to be a “Perfect” Trend Day, I would have liked to have seen a strong opening gap to the upside (instead of an intial push down) but after that push completed and price broke back above the intraday EMAs, then the remaining action could be validly described as “The Most Perfect Trend Day Ever!”

Words would degrade the beauty of the sustained trend action of the day.

Price supported on every single test of the rising 20 EMA, and price formed the ideal “Railroad Tracks” pattern all the way into the close.

Once you suspect we have a trend day in force (admittedly, it took me until just before noon before I figured all the pieces had fallen into place), trading becomes simple (mechanically - but psychologically very difficult since we’re so used to being in ‘fade’ or retracement mode).

Buy any pullback to the rising 20 EMA and trail a stop beneath the rising 50 EMA.  That’s overly simplistic of course, but it works just as well if not better than complex methodologies in my opinion.  Trend Days are special occurrences where a new set of rules are needed.

Throw off oscillators and most indicators (they give false signals like false divergences and false overbought readings) and pay closer attention to moving averages (you don’t have to use the 20 and 50 - you can use your own combination) for entry and trade management signals.

I just wanted to do a quick intraday post highlighting the beauty of Thursday’s intraday price action.

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