One thing that I like to try and locate intra-day is when the market makes that last move into a support or resistance level that appears like a last gasp push. I try to think of it as when a motor takes on it last big of gas and revs up one last time before shutting off.
Is anyone else out there looking for similar things? Any other ideas on how to filter out some of the times that price just keeps on running?
The following user says Thank You to butch1130 for this post:
The last push is typically a fifth wave or a final flag. In my opinion the last push can both create a new high or low, or it can be a failed test of the prior high or low.
This is what I have observed:
Prior to the last push, there is often a situation, where the trend hits resistance. In case it is an uptrend, large traders exit their positions at resistance, and others start entering short positions, starting the distribution process. This temporarily halts price usually producing a climax bar and/or a high volume churn bar. After this happens there will be either a balancing period or a trend line break. The last push comes after that balncing action as a bear trap, or after the trendline break as a new high, which is quickly reversed.
There are two different cases. (1) Parabolic price action. This typically creates a trading range and a retest of the high and low (final flag) with price being quickly rejected. (2) A final wedge, typically three pushes with a trend gradually weakening.
The best setup is a final push (lower time frame) within a final push (higher timeframe). I call this Matryoshka setup, referring to the Russian dolls. Can be detected as a divergence within a divergence of an oscillator.
Countertrading final pushes:
- Wait for a trendline break first.
- Wait for a second entry.
- Only consider a push to be final, if it is outside the mean reversion channel (I use Keltner Channels with a StDev of 3 or 3.5).