Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

The Counter Close

The “Tell” I am referring to is called the “counter-close”. The counter-close is a price bar where the closing price is in the opposite direction of the previous close. In other words, if the futures market were trending higher, a counter-close would close lower than the opening price. If the futures market were trending lower, the closing price would be higher than the opening price.

On the daily chart, a one-day counter close is not enough to confirm a Reaction swing and set up an entry signal, but a 60-minute chart may reveal a nicely formed Reaction swing and offer a potential signal that is hidden from view on the daily price chart.

A counter-close can appear anywhere in a trend, but there are only two places I look for the “Tell” and that is after a major high or low reversal and near the 20-day SMA after a TR pattern or Swing Trading Strategy TC pattern. In Figure # 9.1 I have you can see what a counter-close looks like in a downward trending futures market and an upward trending futures market. The following chart examples will better illustrate how to find the counter-close and the hidden Reaction swing and how it can be incorporated into your trading strategy.
counter

Figure # 9.1 – One-day Counter-Close

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**THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES.

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