John Hill’s 9 Patterns that Signal a Trend Change in action.
Last week I showed the 4 Close Reversal on ES on the daily bars signaling a short. Now, letʼs look at a 4 Close Reversal on 5 minute bars signaling a buy.
This past Wednesday, ES gapped up to show market strength. Price then reacted down to the “red line” – yesterdayʼs close. There, it showed a “tweezer bottom”. This was the setup. The trigger was the 4 Close Reversal bar at 10:25. Get long on the close of this bar. The close is confirmation.
Price rallies nicely towards the highest 5 minute close of the day around 1978, shown as grey line. Here, price forms a “Reverse L-Formation”. This is the setup. The trigger was another 4 Close Reversal at 11:00. Buy on the confirmation close. Price then rallies nicely from here.
Yet another setup and trigger takes place at 1:00. After a big rally, price shows an a-b-c-d-e reaction.
To “systematize this, a buy would be triggered at 10:25 via 4 Close Reversal. Position could have been held all morning until a counter 4 Close Reversal at 11:45. Both of these are on a CLOSE BASIS. Do you get short? Maybe. Get back long at 1:00. Short at 2:00. Loss. Long at 2:25. Out at 3:45. I count 5 trades with 4 winners.
Lundy S. Hill