Recognizing Trend Days
Here's how market wizard Linda Raschke describes trend days:
- Price opens near LoD
- Price closes near HoD
- shallow retracements
- breakout strategies in favour of trend consistently works
My additional observations of trend days:
- price is moving away from VWAP, which itself is trending
- TICK is biased, ie. on a downtrend day, there are few +ve TICK extremes, and the ones that do occur are on lower highs.
By definition, a trend day must be trending for the majority of the day. Therefore, if there is no successful breakout of the 1st hr IB, or if the IB breakout fails, chances are that it is not a trend day.
I am by no means an expert on trend days (just an observer!). I don't have any mechanical criteria that you can enter into an automated trade system to tell you definitively whether the day will be a trend day or not. Everything is all about probabilities. I look at the 5IB initially, and build on the ongoing assessment of whether it is a trend day or not.
I invite everyone to take a look at these charts, and study for some common patterns to help better identify trend days...
These are all great charts and show alot of detail and get alot of information across, so i thank you for that. I only scanned them with my eyes, but im now going to have a better look throught them. :P
Nice to see some structure put into the type of day. Questions to ask as the day starts, Is it trending or range bound? As a day trader understanding the trend early in the session is crucial to effective day trading. We can ride the trend days or take profits according to Support & Resistance on a range day.