Friday, December 14, 2007


1)Price should be outside the Keltner bands

2)Stochastics should be outside the bollinger bands and crossing back up inside for a buy(the opposite for short). But they should be below the 35 level. Both the bollinger and the stochastics work together in the same range of 0-100 on my charts.

3)Daily Absolute Strength should be indicating bullish action for a buy and bearish for shorts. If Absolute strength is neutral or weakly biased trades on both sides of the range can be considered.

4)Point of Control should ideally be taken from previous days trading as the current POC can shift quite a bit intraday.

5)Virgin Point of Control levels from previous trading sessions are valid if not touched until the current days trading session. This is perhaps the most unique and fitting elegance of the original Enthios system as it implies that price must revert to a point of balance or as I like to think of it, as a reversion to a mean.

These are the annotations from the trade setup posted above.

1)Absolute Strength is indicating short so there will be no buys during this session.

2)Stochastics have crossed from above the 65 level down through the upper Bollinger band.

3) Virgin Point of Control (VPOC) has been touched. It is advisable to not take trades even if price comes close as most likely price will return and give a better entry later on. Patience is definitely rewarded with VPOC's. Note also that price is outside the Keltners when signalling short.

4)Profits can be taken in one of two ways on the initial position. Either by touching the opposite end of the Keltners, or the median band if you want to be ultra-conservative about exits. Or...

5) If you wish to follow the wave to its end, you can wait for the stochastics to cross up through the Bollingers from the opposite end of the initial setup, in this case from below.


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