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Learn The Market’s Language
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Learn The Market’s Language

by The MoleApril 9, 2013

As Scott as well as Ivan have said in the past – the market does speak to us and if you want to gain an edge its a matter of you learning the language. If you keep losing then you may be suffering from Cool Hand Luke Syndrome – or in other words: ‘What we have here is failure to communicate – some men you just can’t reach!’

Oh, he likes it alright 😉

What we do here at Evil Speculator is to approach the tape from different angles. If you’re a Zero subscriber for instance then the gyrations of the past few weeks have not come as a big surprise to you. The only candle that may have tripped you was that final quick drop into 1560 into 1540. But even that one was a picture perfect NLSL breach at 1552.5 (we do cover those every day here – sign up to my morning briefing).

But focusing on the Zero signal you can clearly see the developing bearish divergence as we painted new highs and the monster divergence near the bottom as we touched 1540.

If you don’t care about indicators and only care about price then let’s do a little autopsy of the past few candles on the spoos. Starting at the very top we have a major high (highest bar in ten candles). This was followed by a drop and a bounce – the entry was a breach of the low of that white candle near 1546. However the candle that took that entry pulled back hard and produced a hammer – which is potentially bullish. This was confirmed yesterday when the spoos pushed over the hammer candle and triggered a long entry. FYI – the original stop was the 1557.5 high but due to the hammer it was dropped to that candle’s high. I hope you follow along thus far.

Now someone mentioned a possible Retest Variation Sell today – actually no – the rules preclude that as we don’t have three successive red candles. You need one or more lower closes followed by one or more higher closes. The limit for the setup from the trigger candle is five bars. So we’re running late here for a RTV Sell.

However we may be getting a regular Retest Sell setup – here’s the SPX. What you need is a spike high followed by a spike low – check and check. Then we need to count the candles in between those two – that gets us to N=2. Now we need 3 or more candles in between terminated by a shooting star. EDIT: I painted a hammer instead of a shooting star – sorry. Meanwhile we cannot breach the 1573.66 high.

Interestingly however we may also get a Retest Variation Buy. We had a major low – check. As a sidenote it was also a low that breached a prior spike low – another possibility to satisfy the first rule. Now we needed one or more bars higher – check. However what we would need now is one or more bars lower followed by a breach of the high of that bar. That would get us into a long position.

So what happens here in the next two days should be extremely interesting. Remember that the Sell setup dies as soon as we paint new highs – I think that’s rather obvious 😉

Perhaps this answers the question of how I use indicators and price action to stay ahead of the tape. Every single candle gives me more information about the market. I throw in Net-Lines as well which provide additional context. If you mix all that up with the Zero indicator then you do get a pretty good assessment of the odds. All that’s left is to apply the rules, take our entry and set your predetermined stop. And that’s how you play to win – the rest is just talk.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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  • jmoney3000

    Great post! I felt like I was taking a class back in college lol

  • Schwerepunkt

    Yummy. She looks good in stripes.

  • https://evilspeculator.com molecool

    If you wonder – yes, there will be a test.

  • newbfxtrader
  • amokta

    My name is Arcus Parabolicus Epsilus, commander of the Southern Hedge Fund Warriors, General of the High Frequency Traders, father to a murdered dot-com bubble, husband to a murdered real estate market, loyal servant of the true Emperor Benus Bernankius, and i will have my blow-off top, in this bull market, or the next.

  • Th3_Acist

    Amazing!

  • captainboom

    You also have waaay too much time on your hands… 😉

  • amokta

    Thank Russel Crowe & Gladiator 🙂

  • http://dartht.blogspot.com/ Darth_Gerb

    wow. the chart is out already? it’s usually another hour from now.
    a double top, ruined.
    if risk gets up to 82, it’s a ramp and camp IMHO.

    however, that chart is hyper-sensitive.

    try this – a larger box size

    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=1&mn=0&dy=0&id=p38980679348

    -DG

  • http://dartht.blogspot.com/ Darth_Gerb
  • Kerberos

    One unfortunate characteristic of dining out in central Europe may soon be spreading around the US – pan handlers asking for money while eating outside at a restaurant. In fact, I fear I may be the only one left in the restaurant.

  • convictscott
  • Th3_Acist

    I just don’t know what to make of it…

  • amokta

    I forget exactly how it ends but it ends badly for all concerned 🙂

    Anyway will be watching futures closely.

  • amokta

    Can we dare to use the word parabolic here?
    Reminds me of our old friend 2011-silver

  • http://dartht.blogspot.com/ Darth_Gerb

    are you talking about the Movie or the Market?
    maybe both.
    😉

  • Rightside_ot_trade

    interesting setups in equities,
    and you could trade the /ct /cc /si /gc setups
    they are already moving 😉

  • http://dartht.blogspot.com/ Darth_Gerb

    Nice finish.
    T’s work better in sideways volatile markets.
    a little disappointing on the upper bollinger. I set mine for 2.1
    even 2.0 was shy, close, but shy.

    I yield the floor to CS, time for dinner.
    http://s10.postimg.org/jk3dde0sp/spoos_T.png

    -DG

  • AmazingLarry

    Silver was up 1600% in 4 months? Log scale would implicate $1000 in the next few weeks.

  • Joe_Jones

    Nice one

  • convictscott

    My take on it is that in a *volatile* trading range price is drawn like a magnet to support or resistance. This makes sense because if a market is likely to make resistance (in the form of an upper bollinger or old spike high or long term MA or trendline or whatever) traders will stop selling in advance of that resistance. The withdrawal of selling pressure “sucks” the price like a magnet to the resistance, and suckers traders into thinking the upside move is a breakout of the range, but selling pressure comes on like magic. Therefore take the earliest resistance, in this case the old high

  • https://evilspeculator.com molecool

    Wrong word – not sure why people keep using that. It’s exponential.

  • convictscott

    NEW POST! And it’s fine work if I do say so myself

  • https://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨
    ¨°º¤ø„¸ N E W „ø¤º°¨
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • https://evilspeculator.com molecool

    I’ll be the judge of that…