Trade Like a Casino by Richard L. Weissman

Author:Richard L. Weissman
Language: eng
Format: epub
ISBN: 9781118137963
Publisher: Wiley
Published: 2011-08-25T16:00:00+00:00

Figure 7.15 Monthly, Weekly, and Daily Charts of CME Group Crude Oil Futures

Source: CQG, Inc. © 2010. All rights reserved worldwide.

Longer-Term Trade: CME Group Crude Oil

Figure 7.15 shows a timeframe divergence opportunity in January 2011 CME Group crude oil futures for longer-term traders. Because our trading timeframe is longer, we use the daily chart as the timeframe for identifying the temporary divergence with longer—weekly and monthly—timeframes. Nevertheless, many of the same basic principles apply, including the weekly and monthly charts signaling a bull trend according to their nine-period relative strength index readings, entering a long position after the daily chart drops below 35 on its nine-period relative strength index, placing a sell stop below recent cycle lows according to the longer (weekly) timeframe, and exiting with profits at the highs of the daily bar before the bar that triggered the oversold relative strength index reading (see Figures 7.15 and 7.16).

Figure 7.16 January 2011 Daily Chart of CME Group Crude Oil Futures Detailing Timeframe Divergence Trade

Source: CQG, Inc. © 2010. All rights reserved worldwide.

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