QQQ P 3 1/2

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QQQ P 3 1/2
2013-10-02 21:19:17

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  1. P3 1/2 Alert
    • 1. Bearish divergence to signal an undercurrent of change brewing-seen on RSI or CCI
    • 2. RSI indicator to point and start heading down
    • 3. Negative candle on the chart, and the 8 EMA moving own and below the 13 EMA
    • 4. Black PPO and ADX lines to be close to each other
    • 5. PPO histogram blocks to be narrowing downward
    • 6. ADX line pushing away from black PPO line and -DI line to be pointing and moving up, while +DI line points and heads down
  2. P3 1/2 Confirmed Buy Signal
    These should happen in conjunction with each other, but one may happen before the other.

    • 1. The PPO line crosses down over its signal line
    • 2. The histogram crosses the zero line
    • 3. -DI crosses up and over the +DI line (wait for a -DI cross up before entering) If you are a risk taker and want to enter before a cross up of the -DI line, then wait for a cross of the -DI line on the earlier time frame.

    After entering a trade, watch for the P3 1/2 pattern to go through the stages as it unfolds. Look for the PPO and ADX lines to spread apart.
  3. Exit Rules - Alert
    Remember there is often a wobble on the PPO that will produce some of these alerts, so look at the PPO to see if that is what it appears to be. A second or third area of weakness is likely to be the true exit.

    • 1. RSI rises from oversold area
    • 2. 8 EMA rises closer to 13 EMA, appears if it might cross
    • 3. Positive candles (in conjunction with other alert indicators)
    • 4. CCI rises above -100
    • 5. PPO histogram blocks begin to narrow upward
    • 6. Black ADX line flattens or curls downward, and +DI starts to head up and -DI starts to head downward
  4. Confirm Sell Signals
    These signals can happen in conjunction with other indicators. Many times it is better to take gains once your trade reaches its profit target rather than wait for a confirmed signal that gives back a portion of your profit. The signals below are the line-in-the-sand exit signals, other than the price hitting your stop.

    • 1. Crossover of the PPO line over its signal line
    • 2. Cross of the 8 EMA over the 13 EMA
  5. P 3 1/2 Stages
    • 1. ADX and PPO come close together as they mimic each other.
    • 2. -DI rising.
    • 3. PPO crosses down and over its signal line.
    • 4. -DI crosses +DI and eventually the ADX line.
    • 5. PPO wobbles against the signal line.
    • 6. Spread apart of PPO and ADX lines.
    • 7. Exit-Rollover of ADX line and drop of -DI.