How To Boost Your Profits With The “Money Bounce” and “Key Reversal” Signals

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How To Boost Your Profits With The “Money Bounce” and “Key Reversal” Signals

In our weekly training rooms, I teach about Hawkeye Volume to help our traders understand the concepts behind volume trading. Today, I will show you how supply and demand zone theory, coupled with volume theory, can yield fantastic results to your bottom line.

Today’s trading gave us several great examples of what we call the “Money Bounce” and a “Key Reversal” signal.

A Money Bounce is defined as follows: Whenever you have a new supply/demand zone formed, the Hawkeye Zones will color it cyan. The first time price returns to this cyan colored zone, as shown by the first green arrow in Figure 1 below. That is the point where you have the highest probability of a reversal occurring.

TF Trade 04/28/2015 Money BounceFigure 1. TF Trade 04/28/2015 showing Money Bounce.

Once price exits the cyan colored zone (the first bounce), Hawkeye Zones will automatically change the color to blue, signifying that price has hit that zone one time. That way, it is very easy to look at any zone and determine by its color how many times price has visited that zone in the past.

Trading the Money Bounce is straight forward – high probability and low risk. We teach entries using multiple timeframes and our 3-step entry method (come to class to learn this valuable method). But on the 250 tick chart shown in Figure 1, the second green arrow points to the entry point of the short based on the Money Bounce. That is the point where our Trend, Volume, and Momentum (Heatmap) all agree and give us a great entry point short. The target for the trade is given by our shorter and longer timeframe Hawkeye Zones, which were 1248.0 and 1238.0 respectively.

Figure 2. TF trade 04/28/2015 Reversal point and targets.Figure 2. TF trade 04/28/2015. Red arrow shows reversal point, and green arrows show targets.

OK, so you can now see how we profit from a Money Bounce. These types of trades occur more often than you think, and we teach these methods in our weekly training room to all our Hawkeye members.

Now, let’s look at the follow-on Key Reversal using Hawkeye Zones and Hawkeye Volume to identify another high probability, low risk entry point.

Figure 3. TF Trade 04/28/15 Exhaustion and Key ReversalFigure 3. TF trade 04/28/2015 showing short target and volume reversal signal inside demand zone, with partial Hawkeye Pivot low forming, indicating exhaustion and key reversal.

Referring to Figure 3 above, notice that after the price hit the 1238 blue demand zone, the price bar closed higher than the open, and Hawkeye Volume painted it green, signifying that buyers have now entered the market and the short move has entered exhaustion. The following price bar is also showing that we have half of a Hawkeye Pivot forming, telling us to expect three to five price bars of reversal price action.

Figure 4. TF trade 04/28/15 Key ReversalFigure 4. TF trade 04/28/2015 showing Key Reversal, Hawkeye Pivot, and target point at 1252.

As expected, we now see from Figure 4 that the pivot did indeed form, and we have three reversal price bars on the chart. The green arrow points to the target based on our Hawkeye Zones (the target is the next zone of opposite type, which in this case is the supply zone at 1252.0).

Again, trading the reversal is shown in Figure 5, where the long was entered when the Hawkeye Trend, Volume, and Heatmap all agreed on our 250 tick chart, with targets at 1252.0 and 1253.3 respectively.

Figure 5. TF trade 04/28/2015 long entry point and target.Figure 5. TF trade 04/28/2015 showing long entry point and target.

As shown in Figure 5, the summary trades yielded 11.2 TF points to the short side, and 11.9 TF points to the long side, which equates to $2,310 per contract traded. Not too bad for one hour of work!

In summary, learning how to trade using Volume coupled with supply and demand theory can significantly add to your bottom line. If you are a Hawkeye Member, you get all this training for free. If you are are not already a member, CLICK HERE to get our Volume Starter Package, and start coming to our special Thursday training for members only.

Otherwise, we demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.

Good trading,

Randy

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red and green arrows are for illustration only and do not form part of the software]

Never Hijack Your Trading By Second-Guessing The Hawkeye Indicators

Let’s begin this week’s newsletter by looking at the weekly chart of the ES. As you may remember a week ago, I said that we were in a topping formation on the S&P.

ES Weekly 042115

And we can certainly see this in this weekly chart. Notice where I’ve placed those red arrows at the top of the chart and how they are all bearing down on where the Hawkeye top pivot is. (That’s the yellow line extended to the right, and underneath the red arrows).

Now that pivot was put into place on February 27, and since that time, we have been visiting that price area five times. Also, notice how the trend dots have gone flat, indicating congestion.

So, we have our congestion parameters set up there between the top and bottom pivot line extensions. Also, notice where I’ve circled the volume at the bottom. You can easily see how that is indicating total distribution volume, where it is alternating between red, green, and white.

Of course, when you are in trend runs, you get nothing but green and white volume and an occasional red testing volume to test whether the market is solid. But this time, the market isn’t solid, and it’s going sideways. So, it has to breakout of that pivot high extension (the yellow line to the right), to show that we are in the trend.

At the moment, we are in congestion, and you can play this quite easily on your daily charts by knowing where those two levels are, and selling it when it approaches the top line, and buying it when it approaches the bottom line. But, that is a skillful and more advanced trading skill then trading a trend run. But, knowing where you are in the market, certainly helps your intraday trading too.

Now, let’s look at our second chart, which is the GBPJPY.

GBPJPY daily 042115

Last week, I indicated there was a potential trade to the downside coming, and that was indicated where the second blue arrow was pointing up. And if you remember, I said that if it breaks underneath that bar (the yellow pivot line), with no part of it touching it, then we have a breakout to the downside.

I also said that those who are aggressive traders could trade that pivot extension break, if there was a close underneath it. But, as you know, being aggressive means you are taking on more risk. And sure enough, it never happened, because after the second arrow, you can see the price went up to the pivot extension, indicated where I placed the first blue arrow. You can see that that yellow pivot line extension, it went up and visited it again, and the close was greater than the open, so it would have totally invalidated any entry.

The next day, it went up and actually straddled the price line again. So, you can see that now, volume is coming in to the upside, and it will be pushing it up to probably test the Hawkeye stops, where the red cross is above the price.

So, pivots and their pivot line extensions are very important and should be considered as elastic bands and not as rods of steel.

So, if you are doing swing trading or position trading, always wait for a break where no part of the bar touches the pivot that was last formed. Also, remember the other Hawkeye rule that we use, and I’ll give an example of an uptrend here. The close has to be greater than the open and in the top 40% of the range.

So, in summary, to really understand the power of the Hawkeye pivots and their extensions, you can see in these two examples we have been talking about in our recent newsletters have absolutely played out, and have kept you safe in the market. Ultimately, they have shown you where the market is and how to trade it accordingly.

Good fortune,

Nigel

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red lines and red and blue arrows are for illustration only and do not form part of the software]

Hunters Wait For the Perfect Shot And So Should You

Let’s begin with a short update on the ES, that I discussed last week. We are still in daily and weekly congestion. Although the market is rallying up, it will struggle to get above the Hawkeye stops on the daily chart. The critical point we have to look for is a breakout of the weekly pivot high that was established on February 27. If that weekly pivot high is taken out, then all bets are off, and we are off to the upside. But at the moment, we are having distribution volume profiles at the top of this market.

Now, I would like to look at the GBPJPY cross. Let’s begin with the Fatman indicator.
fatman daily

On the daily chart above, you can see I’ve placed a red arrow where the brown line (GBP) is starting to bend down.

And, if we look at the weekly chart (below), you can see that the brown line (where I have placed the arrow) is still in steep decline.
fatman weekly

This shows us that when we get setups occurring on the timeframes of daily, weekly, and monthly, we have a low risk entry.

I’d also like to say that the fundamentals on the British pound are very bearish. We have an election coming in about four weeks in the UK, and it looks like a hung Parliament. In other words, no party will have a majority, so there will be a lot of compromise. The markets don’t like it when there is no solid government in power. So, I recommend that you really start paying attention to all the pound crosses.

On the GPBJPY daily chart, see where I have placed a red arrow, just below the last pivot low extension?
gbpjpy daily

On Friday, the market closed underneath that pivot line extension. Now, because this is a daily chart, and I want to swing trade it, I want to wait until there is no part of a bar that is straddling that pivot line extension (the yellow line that goes through the price that occurred on Friday). So, we will have to wait until Tuesday for a 100% setup on this market.

If you are an aggressive trader, you may already have a short in place on the daily. However, when we come to the weekly chart, you’ll see that the danger signs occur, and you have to be cautious. Now, if you look at the second arrow on the daily chart (on the gray little dot), which shows us an aggressive entry now to the downside. So, everything is in place on the daily. However, we need to have at least one more day (Monday) to get a real confirmation and a low risk entry.

If you look at the monthly chart (which I’m not going to display), you’ll see that the trend dots are starting to roll over. Again, showing us this up move on the GPBJPY is over, and we should expect a decline.

Now, let’s look at the GPB weekly chart, and you can see I’ve placed a red arrow.
gbpjpy weekly

This is the danger area. Can you see that it’s coming right down and touched the Hawkeye stop (the cross)? And if you look on the cross line, you can see that it has come down to that support area seven times. So, as soon as it breaks that support (which might come this week), you have a sure fire, low risk entry to trade the GPBJPY to the downside. But, you must be cautious and wait, like a hunter waits for the perfect shot. So, you must wait for the perfect set up. I do believe we will get a perfect setup this week. So, stay alert and good fortune.

Nigel Hawkes

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red lines and red and blue arrows are for illustration only and do not form part of the software]

Great Volume Price Analysis

In this week’s article, I would like to continue my analysis of the ES, because we are seeing a very important volume and price profile being played out for us. It looks like this market is biased towards the down side. And I should point out, the principles of my analysis here can be applied to any market. So, let’s begin with the monthly chart:

es monthly

If we look at the monthly chart, notice the area that I have circled in red, where we can see distribution volume. This shows that this market is topping. If we look where I have placed the red arrow, that is also a phantom isolated high, which was tested for the month of March. So, March tested the February phantom high and came down. And, we also have the price dot going flat indicating that market momentum is coming out of this market.

es weekly

If we now look at the weekly chart, you can see that the circle on the bottom around the volume is also indicating distribution volume. Now, where I have placed the three arrows, you can see that it’s come up and tested two times the area that generated the isolated high (the yellow dot on the left). And now, on the last arrow, you can see we have closed underneath the trend dot for a second week, and the trend dot has gone flat.

es daily

And finally, let’s look at the daily. On the daily you can see a lot more. And again, you can see the circle at the bottom, it indicates pure distribution volume. All of this indicates that this market is in a distribution mode, and you can see that I have placed two cyan arrows under the price indicating the resistance area or the support area that this market has to crack through to the downside, which is 2033.

If the market closes under 2033, then it will certainly be starting a downtrend. And you can see that where I have placed the arrow on the top that is on another pivot high up there. But, I put a dotted line there, which shows you all the way across there have been pivot highs to the left, and if there was more chart data, again and again, showing that was a major point of resistance that it just could not get through. And that level is the 2107 area. The trend dots are neutral, and you can see they are declining. And if you look at the bottom at the heat map, it has now gone to a dark red, indicating that the trend bias remains to the downside.

So, in summary, by putting these three charts together, we are coming to a very critical turning point in this market. I know I have been saying this for the last several weeks. But, the more I look at it and analyze it, this market looks very weak and will need a lot of volume to come into it to take it back up to test the overhead resistance.

Great Trading!

Nigel Hawkes

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red lines and red and blue arrows are for illustration only and do not form part of the software]

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