August 8th, textbook day for the NasDaq



The first five minutes of the NY session is an incentive move down, taking momentum from strong positive to strong negative. Followed by a stall at roughly 1/2 back and an incentive entry at the close of the next candle coincident with a rejection of the momentum indicator (cci) zero line. Expectation is to make it into the Kumo and then lose incentive.

Just after consolidation price moves with impulse up to the first five minute swing low, coincident with the Kumo top. Followed by strong incentive and zero momentum rejection. Standard entry except that price is now close to the Kumo bottom. As a rule two points is my minimum for a reasonable target and this is close. In the end I got one point net, maybe not +EV.

Back into the Kumo, standard stall & reject with incentive and momentum zero rejection entry. At this point there has been clear downward incentive and predictable movement so my expectation at this break is that there might be a big move. The hope is to get to the 233 extension (green dashed line) of the first five-minute range (grey box at LHS). Price drops all the way to the hopeful target pretty quickly, followed by a strong reversal leg – evidenced by significant momentum histogram. Next another stall & go, expectation is a double bottom and it plays out.

I don’t normally like reversals but this one is textbook – Strong move to a predictable level followed by a double bottom and what looks like a higher low at a momentum zero rejection … followed by a climb all the way back to the first five range.