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Trading the Jam way

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Juno Beach
 
Futures Experience: Advanced
Platform: Ninja and TS
Broker/Data: Optimus Futures / Matt
Favorite Futures: multiple
 
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Posts: 135 since Sep 2009
Thanks: 22 given, 117 received

Three Pushes Pattern

This is a very reliable pattern and can be traded in 2 ways. First lets go through and describe the pattern then we will get into discussions about trading it.

Three successive pushes to a top or bottom with near Symmetry and Retracements often meet Fibonacci Ratios. When each successive leg is less then the previous leg it tells you that a possible reversal is pending. Volume is also another tool the technician can use to help determine the weight of the evidence.

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When trading this pattern in a reversal fashion, I like to see more supporting evidence such as divergence forming on the MACD, RSI or our Q-Filter. Having areas of support or resistance is also something to watch for and when we get three pushes into support and resistance with divergence, this can lead to a very nice high probability reversal.

http://content.screencast.com/users/jamthetrader/folders/Forum%20pics/media/9a6f...b/3%20Pushes%20Chart.JPG

Notice in the chart above that each successive push is less then the previous push. This is telling you that the market participants are getting tired and your market is getting ready to attempt a reversal. Remember that at the right edge we never really know what the market is going to do, but with good analysis and supporting evidence, we can make higher probability decisions.

There are 3 ways to trade this pattern,

As a reversal off of an area when the third top is in place
Wait for a break below the trendline supporting the bottoms then your setup
Back in the direction of the original trend if the three pushes pattern is not at any areas and no divergence is present. In this case wait for the pullback to meet a fib ratio then look for your entry pattern back in the original market direction

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