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Educational Note: A gap present on an S90/Crossover increases
the odds of success
as a profit target and also as a new reversal entry.
S90/Crossovers that occur in
conjunction with a larger compression trend will also indicate a
strong level for reversals
or targets—provided additional confirmations exist to justify
the entry. Also, when
one level, is found on numerous time
compressions, this strengthens
its value within a trading range for a future reversal entry or
a profit target if trading
toward the duplicated level. It may often become a former
historical S90/Crossover level
where the level has been revived and duplicated. To reiterate
the concept for clarity, this
type of market development allows the duplicated level to become
a stronger area for
profit targets and also possible new reversal entries at the
time of the strike.
Only two
time compressions were
duplicated on the bear side of the markets. During this period
of time, the market was in an overall uptrend, and therefore
more S90/Crossovers appeared. Should the market change direction and develop a new
downtrend, then more new S90/Crossovers will gradually develop
to match the larger S90/Crossover,
All of the levels were identified as legal
crossovers (LCs) and must
be respected as potential reversal levels if additional
confirmations exist at the time of
level arrivals. Notice the one duplicated level, which is a
historical S90/Crossover area,
but is also duplicated on other time compressions.
Remember, trends within trends occur at the
same time, depending on the time compression size that you’re
observing.
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This sounds like an oxymoron, so here’s an
explanation: The five-minute time compression may show that an
immediate downtrend is in progress, while the two-hour time
compression has the appearance of an immediate uptrend, and the
weekly is in an uptrend or a downtrend. The
point is that not all time compressions may agree with each
other at the same time regarding
direction. Remember, it takes 2,016 five-minute candlesticks to
form just one
weekly candlestick. This means that with smaller time
compressions, there may be a lot
of trend activity with up or down directions going on while
larger compressions may not
acknowledge the activity of smaller compressions.
Trading ranges seem to change almost daily due to constantly
changing market
conditions. In any trading range—whether in 1., 5., 10., or
30+.minute time
compressions—the Fibonacci levels found within all trading
ranges are known to be
measured into infinity. If this is true, then would it not be
true that pivot points and Fibonacci
levels would occur in such massive numbers that you would be
confused as to
which level is the most important? This is the problem with
pivots: Most traders cannot
figure out which pivot is telling the truth. If an S90/Crossover
just happens to be on
the same pivot point, then you have a combination that produces
a very strong level for
targets or reversals.
When the legal S90/Crossover is combined with confirming signals
from a legal gap,
a trend wall, Fibonacci clusters, or an overlapping Fibonacci
level, it becomes a powerful
reversal point for an entry or a target to trade toward. An
explanation of the previously
mentioned confirming signals will be explored along with the
applications in future
chapters.
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