Blog,  Study Videos

Executive Summary: Cross Currents Webinar


Here are some key takeaways from Anne-Marie’s 23 January 19 seminar on cross currents.

Cross Current Summary:

 

  1. By evaluating specific momentum indicators, we can determine if the overall strength of momentum is more bullish or bearish at a given point in time.
  2. Cross Currentsis the term we use when the Momentum Indicatorsin different time frames are providing conflicting bullish and bearish signals.
  3. Ideally, we would prefer to have all the indicators providing us with momentum in the same direction, but this seldom occurs. When the overall price motion is not trending in one long overall direction, i.e. rangebound or potentially changing trend, it becomes necessary to deconflict these signals.
  4. We can use the Cross Current methodology for any 2 charts. But when the 4hr and 30 min charts are providing conflicting momentum signals, it becomes especially important to resolve.  4hr and 30 min provided important momentum data for intraday trading.
  5. It’s important to note that trading takes place in an ever changing, dynamic environment.The momentum indicators we use for resolving Cross Currents are continually evolving themselves.  Once the strength of momentum is determined, vigilance is required to recognize any future changes.
  6. Bucketsis the term we use to categorize the momentum indicators. We use 2 buckets:  Long (bullish) and Short (bearish)
  7. We qualify 8 individual momentum indicators.For illustration, we’ll assume we are evaluating the 4hr and 30 min charts
    1. Price direction of 4hr (bull or bear)
    2. Price direction of 30 min
    3. Slope of S SMI 4hr
    4. Slope of S SMI 30 min
    5. Slope of Moving Average 4hr
    6. Slope of Moving Average 30 min
    7. Is price above or below the moving average on the 4hr chart (above = bull, below = bear)
    8. Is price above or below the moving average the 30 min chart?

 

  1. Make the bull or bear determination for each indicator and summarize your scores to discover the bias and strength for the overall momentum.
  2. Once the overall momentum is determined, it provides value for:
    1. Qualifying potential entry points and leveraging existing momentum. In other words, trade in the direction of overall momentum to increase the probability that the underlying will move in the desired direction.
    2. Position management
      1. Trading with overall trend has increased probability of achieving more than one target.
      2. If you are trading counter trend (against overall momentum) closing the position at the first target should be considered.
en_USEnglish
en_USEnglish