Friday, February 09, 2007

Crossover For Profit

I've talked about crossovers before but I'd like to do a new post on them and show you how they worked once again. By doing this I am able to ensure that my tools are still sharp and that they are capable of making money.

The crossover is a single candle set-up and it is simply when the candle in the period you are observing opens below the EMA 21 and closes above the EMA 4. Here is PNTR as an example.



You can see in this example using the 30-minute candles how the second candle opened below the EMA 21 and closed above the EMA 4. This is a high probability indicator that the stock is going to go up. This can also work with a stock that has gapped down to where the EMA 4 is below the EMA 21. In this instance the open is below the EMA 4 and the close is above the EMA 21. Here is CMRG as an example -



But it doesn't end there - the crossover set-up works both ways - short as well as long. Here is IMOS on a short Holiday -



And CVTX also on a short ride -



I never tried this with simple moving averages so I really don't know if it would work with say a 5 and 20 but it probably would. As you know - I like to stay up to date with technology. Also any candle can be used in the crossover set-up, it doesn't have to be the first or the second.

With crossovers you have to set a close stop because a switch back is possible. Using the longer period set-ups is helpful in this regard. Note too that volume really doesn't get involved. I've used crossovers to identify swing trades too.

Remember - NO GUARANTEES - this is not an invitation to speculate in the stock market.

Good trading today.

2 comments:

Red Hue said...

Marlyn,

I like this scan...I use to use something very similar but a bit more strict trying to catch early reversals...I would also add something requiring bar to also make new 3 day high etc.

QUALITY STOCKS UNDER 5 DOLLARS said...

Great post nice.