I am currently sim-trading eminis - CL, ES, and NQ. Intraday/scalping, 1-5 minute candles.

I'm working on a strategy that involves watching for sudden big moves/spikes (up OR down) and wait till that move is over, then enter to catch a few ticks of the reversal/retracement. Big sudden intraday moves usually reverse themselves by almost 40-50% of the original spike. But obviously the REAL trick is, how to confirm (to the greatest certainty possible) that original move is definitely over and is reversing.

This is basically a "peaks & slams" strategy, riding the reversal/retracement.

So, any suggestions on a set of indicators that could confirm (to maximum degree possible) the reversal of that original sudden spike? The signal/confirmation can be based on indicators, OR chart patterns or candlestick patterns - whatever works best. And certainly volume would also be a factor.

Ardubya

I am currently sim-trading eminis - CL, ES, and NQ. Intraday/scalping, 1-5 minute candles.

I'm working on a strategy that involves watching for sudden big moves/spikes (up OR down) and wait till that move is over, then enter to catch a few ticks of the reversal/retracement. Big sudden intraday moves usually reverse themselves by almost 40-50% of the original spike. But obviously the REAL trick is, how to confirm (to the greatest certainty possible) that original move is definitely over and is reversing.

This is basically a "peaks & slams" strategy, riding the reversal/retracement.

So, any suggestions on a set of indicators that could confirm (to maximum degree possible) the reversal of that original sudden spike? The signal/confirmation can be based on indicators, OR chart patterns or candlestick patterns - whatever works best. And certainly volume would also be a factor.

Ardubya

You could try looking at order flow on a DOM or a footprint style chart. Look for heavy order flow when price breaks down say followed by flush through they large volume on the Bid where passive buyers are absorbing, followed by aggressive buying and enter. Or wait for that and price to push back up, then another attempt by the sellers to push down but when price reaches that buying level that people were selling in to heavily, there is a lack of selling and price moves up again.

You could try oscillators such as the MACD or RSI and look for divergence like price making a new swing low but the corresponding drop in the RSI doesn't make a new low so the divergence suggests the most recent down move has less strength behind it.

You could use a small time frame chart like a one minute with a volume histogram and look for volume spikes which you quite often see on stop run blowouts then look for the price action in the candlesticks to show that the move is over and the sellers have run out of steam.

Be careful about spending too much time trying to find the best combination of indicators. Investigate a few methods and when you find a methodology that makes logical sense to you as to why it should work then stick with that and try using it and giving it a fair attempt without changing things further. Accept that some trades will be losses (keep them small), and some days will not suit your methods and you might not trade, or again take a small loss and learn to stop early when it just isn't your day.
(And remember to take any advice you get on an internet forum with a pinch of salt until you validate it yourself)

Good set of indicators for this is from the Intentional trader. He uses most common ones such as RSI, MACD etc but with a good visual display. The other thing what will help is just knowing the market you're trading really well and more often then not you'll get a good understanding of the markets movement. I mainly trade Dax because it gives good reversals, and as others pointed out, you can anticipate momentum as well in the same way as its a reversal all the same. For the most part find something that works and get really good at it. No set of indicators are going to be perfect, for me they're just a visual aid to help me confirm what I'm already seeing. Hope that helps.

Thanks Matthew,
Coupla quick questions,
Re: ".....with a volume histogram and look for volume spikes"
1. What would be a good Volume Histogram?
2. Is a Volume Histogram the same as a Volume Oscillator?
Ardubya

To be clear I am just suggesting these in response to your questions, not endorsing any methodology.

1. Just a basic Volume indicator that probably every charting package has such as at the bottom of this chart:

This is the video on volume spikes that TraderTS mentions in his post (this version from YouTube):


2. For suggesting divergence such as the RSI indicator (like all indicators it all looks very clear after the event):