In the last news letter, I spoke about MTF’s and consolidations. I used the ES as an example. I showed that we are below a major MTF on the higher time frames. The question will be are we able to get above this MTF to stay bullish. What are the signs that we can look to show us that we can get above the major MTF. Its important to let the chart give the clues to what could happen. We must take our emotions out of trading. A lot of people are worried about there long term positions. The truth is we a not in the clear yet. We are more likely to consolidate or even set up for a short. We really need to get above the major MTF to have any signs of hope to stay bullish. Personally for myself I have learned to trade the market up or down and not let any bias control my judgement. To let the chart tell me which way to trade. Lets take a look at some higher time frame charts and see whats a head of us.
Here is a QTR chart. As you can see we are bullish. Still above the Kijun-sen and touching the Tenkan-sen. What I have marked off is the 26th bar. This is important because the Kijun-sen will not move again until it has reached the pivot low 3 bars from now. So the Kijun-sen will remain flat for the next 3 QTRs or the rest of the year. What we need to watch as well is if price closes below the Tenken-sun. This could be the start of a counter trend on the QTR chart.
Lets take a look at the next QTR chart I have marked off.
Like I said we need to see what goes on here with the Tenken-sun. As you can see I have marked off the 9th bar. As this bar moves next Bar/QTR it will put it in between pivots high and low and cause the Tenken-sun to move up and go flat. At this point it will become equal to the major MTF on the monthly, weekly and daily. This will give us a 4 time frame MTF.
Here are the Monthly, Weekly, and Daily charts.
Now we can see on the Daily we hit he bottom and bounced off. Price pulled back across the Kijun-sen bullish. Because it did not break the low, this is our first sign of weakness on a short. If you have followed any of Manesh’s articles, he has spoke of ES consolidating for the year. This would be the first signs of this happening, but price still needs to break above the major MTF.
Now lets take a closer look at the Daily chart.
Now you can see where I marked off the last current high and low of the pivots. I put a fib replacement level there to show the 50% level. If you read my last article on consolidations, you can see that in the middle of a consolidation you will find a MTF. As of right now, there is not one. Nothing on the lower time frames or higher. Take a look back at the weekly chart and count 9 bars back and you can see the a cliff. What will happen over the next few bars on the weekly, the Tenken-sen will move down then go flat un-less new highs or lows are made. The question is will the weekly Tenken-sun match the daily to form a MTF? And in time will the lower time frames join up to match the daily as well? Will this be a consolidation with in a consolidation? If this is the case then we will have another MTF. This will become important because price will need to stay above this new MTF. This will be a good sign because price does not have a strong MTF support as of right now. To keep bullish we want obstacles below us. And the more MTF supports we have the better chance we have staying bullish.
What I will be looking for is a pull back to the keijun-sen. I will look for a MTF to match the kijun-sun and look for price to hold. If it does not pull back to the kijun-sen, then price is telling me sentiment is strong and I’ll look for price to break the cloud. If neither of these happens and price moves bearish, I’ll follow my consolidation rules and look to retest the pivot low. All in all, I will look for price to give me the clues I need. These clues will come from finding the MTF’s and seeing how price reacts to them. I will not let my emotions affect my judgement. If price breaks down then that’s what the charts telling me and I’ll set up bearish. As of right now, until price gets above the major MTF, I will consider price bearish for the year.
Please take look at my past blogs to read more about MTF’s, Email alerts, and Consolidations.
If you have any questions about how to use the multi time email alerts or set up real time scanner, email me at mcolquitt@ichimokutrade.com. I will set up a 30m help session.
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