Trading Lessons: Most Precise Way to Find Bounce & Termination Points

Focus: STRATEGIES

Jeff Greenblatt Image Jeff Greenblatt Director, Lucas Wave International, LLC

My fellow trading instructors have traditional as well as non-traditional methods. I teach a method called triangulation which helps the trader identify the most precise way to identify the Kairos moment when it comes to the continuation of the main trend. Since this is an introduction, here is one example.

chart

Price and time square when there a match when both vibrate at the same point. In this case, we have the US dollar/Canadian dollar (USD/CAD) on a 15-minute chart. A bounce in a downtrend terminates in a triangle (not to be confused with an Elliott Wave or what you learned in Edwards and Magee) of three points.

The termination point here is a high price of 1.3633 at 32 bars high to high. In many cases, the price and number of bars match perfectly but a margin of error of plus or minus one is acceptable. Here the vibration is 32 bars with an ending price of 33. The trader waits until the formation completes and gets a candlestick reversal formation. After the price action reverses on the “33” it leaves a small tail and puts in a bearish engulfing pattern on the red bar. Once that materializes, the signal is complete.

The Kairos method of squaring price and time can be used for stocks, commodities, futures, and forex. It works for intraday, swing or long term. It is helpful to options players concerned about the evaporating time value of the instrument.

Using this chart as an example which was early phase bear for the overall pattern, those who might have bought the low hoping for a bottom would observe the bearish engulfing formation and get out of the way without a major loss.

The calculation shows not all pivots are created equal. Those looking for the price action to drop,  thinking it might be the continuation of a new pattern, understanding how price and time vibrate, well, they may see this as an opportunity and get in the flow with the market.

Depending on the time frame, Kairos can be utilized for scalping. But, by adding some strategy if you look for important support or resistance areas the better moves can be identified at favorable risk-reward points before it becomes obvious to the crowd.

Subscribe to Lucas Wave International newsletter here

 
Clicky