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Notice that the line is drawn down and
connected at the top of the resistance points. When the market
breaks through the level as a reversal, the market offers an
entry point at the breaching point—provided other volume
indicators (such as an ROI) are in agreement.
If the market does not come back and open and close below the
trend line after the reversal, then it is considered a legal
crossover. In the future, if the market comes back to this
level, it should bounce off the level as a possible new reversal
entry—especially if there is also a horizontal S90/Crossover
and/or a Fib level in the general area of the S90/Crossover
trend wall strike. This sounds very complicated, but Figure 8.3
should help you grasp the concept.
Notice the hole or space that was created during the market each
time it returned to the trend line. This hole is something that
many traders do not count as a confirmation for a future trade;
however, a second deliberate hole in the market with volume
indicators in agreement regarding direction of the market flow
has generated many positive trades for those who have open minds
to learning something different.
Figure 8.4 recognizes a second hole that has
developed from a trend wall that will eventually offer a trend
wall S90/Crossover. The market breached the trend wall after
forming a second hole in the market. The breach was justified by
the trend wall and additional confirmations that were related to
volume indicators. Larger time compressions are best suited for
this trade entry.
As mentioned earlier, a hole or semicircle
found within the trend is something that many traders do not
count as a confirmation for a future trade; however, a second
deliberate hole in the market with volume indicators in
agreement regarding direction of the market flow has continued
to generate many positive trades.
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Although all time compressions may offer this
type of entry opportunity, larger time compressions are best
suited for a trade entry of this type due to the recognition of
more volume. As with any trade, the more volume, the more
opportunity will be present as well as risk.
What I refer to as “holes in the market” may
sometimes confuse traders because they think of a complete
circle, but I am referring to a half circle. A 30-minute half
circle is found to be different from a 10-minute, two-hour, and
one-day chart half circle or for any time compression. A
five-minute hole may not be recognized by larger time
compressions, similar to the way a five-minute resistance is not
recognized by larger time compressions. A four-hour hole may not
be noticed or duplicated in the weekly chart, because they
represent (to me) different time compression worlds. A trader
may find that the same visual feature, pattern, or signal is not
found in multiple time compressions on almost all signals.
However, if a signal is found in multiple time compressions,
then this becomes a very strong level or signal to either enter
the market or exit if you are approaching one of these
representations.
A simple example of this is a resistance point. As defined, a
resistance point is a high with two lower candles to the left
and right of the resistance top. A five-minute candle may offer
a perfect resistance point, but then if you go to the four-hour
chart, most of the time you will not find that perfect high,
because it is buried within a single fourhour candle that is
made up of 48 five-minute candles. It is the same with the holes
in the market: A 30-minute hole may not be viewed in all
instances on larger time compressions.
Therefore, if you do find a match on all time compressions, then
a possible reversal is often imminent—and even this great
duplicated combination of signals needs additional confirmations
to increase your safety in the market.
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