3 Minute TF Chart

July 31st, 2010

Hi Traders,

Here is a quick chart on Fridays gap down. We were actually gapping down to the bigger time frame support on Friday. This is the value in knowing if we are at bigger support or if the market has further to fall. Trading a gap with just looking at the gap is a very tricky and emotional thing to do. Trying to play gaps consistently by just watching the gap is almost impossible unless you are scalping for 2-3 ticks which we do not do.

Notice how the TF gapped down and then we had blue bars. This tells us that the direction before the blue bars is most likely over. In looking at the chart would you continue to short the gap if you had the blue bars on your chart?

From the blue bar low the TF rallied over 17 points. Our scalper chart gave us 2 clear signals to get in long inside of this rally. From the 655 high the TF made a perfect correction patten that was also very clear on our scalper chart then there was a aggressive buy at the 648 level.

On a Friday if you took 5-6 points out of the scalper in the morning there would really be no reason to trade the long signal at the end of the day even though it was good for 6 point of potential profits.

We have changed the way the Kill Zone indicator looks. Now you can have the choice to make the bars a different color when the move is starting and when it is over. Like on this chart the blue is when the move is over and the yellow is when the contraction is going to turn into a bigger move or a breakout type trade. In this example the yellow bars came in right in the middle of the correction so we would not jump on with any size at the yellow bars.

It is important to know that our indicators are specifically designed for our trading approach adn the patterns we trade. We are not just buying green and selling red. The market has too many variables to be doing that kind of simple trading approach.

If you would like to see a specific chart contact us at trade@eminischool.com and one of our traders will get back to you.

Happy Trading,

www.eMiniSchool.com