A Beginner's Guide to Short-Term Trading by Toni Turner

Author:Toni Turner [Turner, Toni]
Language: eng
Format: epub, pdf
ISBN: 978-1-4405-1520-0
Publisher: Adams Business
Published: 2010-07-15T00:00:00+00:00

FIGURE 9-4. iShares Trust DJ Broker-Dealer (IAI). RealTick by Townsend Analytics. This daily chart of the iShares Broker-Dealer Trust (IAI), which is an ETF, illustrates the use of the MACD-H (histogram) indicator. In this instance, note that while price made a higher high from late November into early January 2007, the MACD-H was weak during most of that period. In fact, the IAI only managed to approach its prior highs due to the rapid multi-day upmove in early January, but still fell short. From there, with the IAI putting in a series of three slightly higher highs (“triple top” in advanced technical talk) through February, we have a solid negative divergence with the MACD-H. The actual sell signal when MACD-H crosses its zero line is “a day late” for most short-term traders. However, the divergence, the distribution characteristics of volume, the last two tops being confirmed by engulfing bearish candles, plus the breakdown through moving averages certainly gave traders ample signals for a short entry, as well as warnings to take profits in long positions.

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