Using Parabolic Sars and Squeeze Indicators Intraday
GILD - 3 min intraday chart. Indicators: Squeeze Momentum, Parabolic Sar, and VWAP
These are new indicators for me, so I did this to help me to interpret and utilize them to execute an intraday trade.
First, here is a brief overview of the Indicators used in this chart.
The Squeeze Momentum Indicator is made up of 2 components: Graph Columns and Stars.
The graph columns show the direction on the trend and the intensity. Bright Green is uptrend growing intensity. Dark green signals a loss of momentum and the reversal to the downside. Bright red is a downtrend growing intensity. Dark red signals the loss of momentum and reversal to the upside
There are 2 colors of stars. Red is the squeeze. Grey is the release. When the stars go red to grey, it results in powerful move up or down depending on the color of the graph. Generally, you can enter a trade within 1-3 grey crosses, and exit a trade by 3rd red cross.
Parabolic Sars is really simple. If the price is above the green dots, you can go or stay long. If the price is below the red dots, go short or stay short.
VWAP: I basically use this as a line in the sand. Note: you could use moving averages, but I found that they just made it too confusing, and more difficult to read with no added benefit.
The red and green boxes mark the entry and exits of the possible trades. Ok, so executing the trades.
I skip the first 15 minutes to allow for a proper setup.
At 9:45 we have a grey cross within the red graph, the price is below the red dot, and the VWAP, so go short
At 10:33 we have the 3rd red cross and the the graph is dark red, so you cover. (Short 16 bars/48 min)
At 10:39 we get a grey cross, so go long. (You could have a more conservative entry by waiting for the 2nd or 3rd grey cross).
At 10:54 the price moves over the green dot. There was also a higher high, so you stay in.
At 10:57 the price is rejected by the VWAP, and it is the 3rd red cross on the squeeze indicator.
At 11:09 it is rejected again by the VWAP, it had a lower high, and we are now on the 7th cross, so it's time to sell. (Long for 10 bars/30 min).
It continues squeezing until 11:39 when we get an explosive move up! It goes up over $1.50 in 1 candle. It blew though the VWAP, and price is above the green dot, so go long.
Between 11:57 and 12:00 there is a small pullback, so you could take some profits, but there is no need to exit the position at this point.
At 12:12 The graph changes to dark green (loss of momo), there was a lower high on the last bounce, and it is also the 2nd red candle consisting of mostly tail at the top, so it's time to sell or reverse your position and go short. (Long for 11 bars/33 min)
At 12:15 you have either reversed your previous position, or you are entering a short here. You are on the back end of the move, you have a confirmed lower high, the price is blow the red dot.
13:12. A higher low was put in, and the dark red graph is getting smaller, so it's time to cover. (Short 20 bars/1 hour).
At 13:18 a green dot appears blow the price, so you go long) or you could have reverse your short position 6 minutes ago depending on how aggressive you want to be).
At 14:36, the graph is dark green and close to the midline, so it looks like it is just going to go sideways the rest of the day, close out the position, and keep watching it. (Long 26 bars/1 hour, 18 min).
The red crosses on squeeze momentum indicator stayed for the remainder of the day, and the graph stayed near the midpoint, so there was no momo in either direction, so no further trades were made.
These are new indicators for me, so I did this to help me to interpret and utilize them to execute an intraday trade.
First, here is a brief overview of the Indicators used in this chart.
The Squeeze Momentum Indicator is made up of 2 components: Graph Columns and Stars.
The graph columns show the direction on the trend and the intensity. Bright Green is uptrend growing intensity. Dark green signals a loss of momentum and the reversal to the downside. Bright red is a downtrend growing intensity. Dark red signals the loss of momentum and reversal to the upside
There are 2 colors of stars. Red is the squeeze. Grey is the release. When the stars go red to grey, it results in powerful move up or down depending on the color of the graph. Generally, you can enter a trade within 1-3 grey crosses, and exit a trade by 3rd red cross.
Parabolic Sars is really simple. If the price is above the green dots, you can go or stay long. If the price is below the red dots, go short or stay short.
VWAP: I basically use this as a line in the sand. Note: you could use moving averages, but I found that they just made it too confusing, and more difficult to read with no added benefit.
The red and green boxes mark the entry and exits of the possible trades. Ok, so executing the trades.
I skip the first 15 minutes to allow for a proper setup.
At 9:45 we have a grey cross within the red graph, the price is below the red dot, and the VWAP, so go short
At 10:33 we have the 3rd red cross and the the graph is dark red, so you cover. (Short 16 bars/48 min)
At 10:39 we get a grey cross, so go long. (You could have a more conservative entry by waiting for the 2nd or 3rd grey cross).
At 10:54 the price moves over the green dot. There was also a higher high, so you stay in.
At 10:57 the price is rejected by the VWAP, and it is the 3rd red cross on the squeeze indicator.
At 11:09 it is rejected again by the VWAP, it had a lower high, and we are now on the 7th cross, so it's time to sell. (Long for 10 bars/30 min).
It continues squeezing until 11:39 when we get an explosive move up! It goes up over $1.50 in 1 candle. It blew though the VWAP, and price is above the green dot, so go long.
Between 11:57 and 12:00 there is a small pullback, so you could take some profits, but there is no need to exit the position at this point.
At 12:12 The graph changes to dark green (loss of momo), there was a lower high on the last bounce, and it is also the 2nd red candle consisting of mostly tail at the top, so it's time to sell or reverse your position and go short. (Long for 11 bars/33 min)
At 12:15 you have either reversed your previous position, or you are entering a short here. You are on the back end of the move, you have a confirmed lower high, the price is blow the red dot.
13:12. A higher low was put in, and the dark red graph is getting smaller, so it's time to cover. (Short 20 bars/1 hour).
At 13:18 a green dot appears blow the price, so you go long) or you could have reverse your short position 6 minutes ago depending on how aggressive you want to be).
At 14:36, the graph is dark green and close to the midline, so it looks like it is just going to go sideways the rest of the day, close out the position, and keep watching it. (Long 26 bars/1 hour, 18 min).
The red crosses on squeeze momentum indicator stayed for the remainder of the day, and the graph stayed near the midpoint, so there was no momo in either direction, so no further trades were made.