Blow-Off Bottom – Again

Being able to pick a bottom in a stock or an index is an amazing skill that should be learned and then honed. Being able to pick a bottom in an hourly format is even more important to a short term trader. And it isn't that difficult to do in this age of information availability.

The chart that I used in the last post – the SPY in hour format just so happened to contain two crystal examples of a blow-off bottom.

There are simple rules for identifying a blow-off bottom. First it must follow a decline of some kind. Second it must be accompanied by larger than usual volume. And, third, it must contain a candlestick that closes in the upper half of its body. If you look at A and B on the chart you will see all of these features annotated.



Practice looking for these in every time frame and you will be rewarded in your trading forever.