Trend trade on Dow Futures makes a 56 point gain per contract. While most trend trades are rather simple, sometimes they can look different and still be a trend trade. The 45 minute chart trend ATR is blue but the key is the small white dot above price. The small white dot identifies that the “flip” of the ATR from red to blue was mathematical noise and not a change in trend direction. This indicates that price will come back to the ATR on the 45 minute. In other words, price needs to find an area to support an increase in price.
Trend Trade on Dow Futures for 56 Points Using Higher Timeframe
As I mentioned in the live trading room to my clients this morning, the 180 minute Dow chart showed that price was at the ATR stop on the 180 minute chart. The ATR always provides support or resistance (depending on whether it is above or below). The 180 minute would push price down giving a trend trade on Dow Futures to the short side. Trying to go long into the 45 minute would give losses because actually that would have been against the trend (although it may seem that you were going into the 45 minute). The fact that price did not break through the white dot on the 45 minute chart, confirmed the power of the 180 minute chart. In other words, all the charts were screaming to go short but the trader had to be able to read the different signals together.
Since we study both the 45 minute and the 180 minute chart, then we knew the trend trade on Dow futures was only to the short side. By identifying which direction our trade would be, the only requirement left was where to enter. The ATR strategy on the 3 minute showed a perfect entry at the ATR on the 3 minute chart with a risk of only 15 ticks. Price moves down and so does the aggressive stop until finally stopping us out with 56 points per contract, providing a very nice trend trade on Dow Futures.