‘Pendulum Swing’ Trading Strategy | Crude Oil, Emini, Nasdaq, Gold, Euro

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We had some BIG moves on the charts today, but looking deeper into the charts, it’s easy to see that the ‘pendulum swing’ strategy is going to be the most effective way to plan our entries and exits for Wednesday’s session.
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Crude Oil is racing higher back to the monthly highs with a short-covering rally off today’s low, which tells me to find a shallow pullback before I miss the finishing drive up to the highs.

Knowing this, I’m keeping my eyes open for a Spike & Channel or a trading-range, and once I know what we get, then I start looking for the entry pattern from there.

E-Mini S&P is bearish and trying to finish the ‘pendulum swing’ target back below the range low, but look closely and you can see we’re sitting in the middle of this range – a horrible place to trade.

Keeping this in mind, I’m going to wait for my shot to sell off the high of the range using a buyer-failure pattern, or wait to buy the low of the range using the “nested” failure set-up.

Nasdaq is bullish with a Spike & Range pattern, which tells me to look for buying opportunities below the range using the 2-Try Failure pattern.

Furthermore, if the buyers try to breakout of this range to new highs, I need to stay patient and see how the markets respond.

If it’s strong, I can trade the 2-Try Breakout Pattern if it’s on strength, but weakness for the bulls will tell me to fade the breakout back down again.

Gold is bearish with four legs lower into a narrow trading-range, which tells me to sit-on-hands and wait for price to pop higher so I can sell into the stops of the buyers looking for the reversal.

Speaking of the reversal, it’s also easy to see a major ‘pendulum swing’ support level right at today’s low, which encourages us to watch for a short-covering rally and the buying opportunities that come with it tomorrow morning.

Euro is bearish with a flag pattern, and with this flag pattern “walking on thin ice”, my plan is to wait and see how this market responds.

If we see the failure, then I look for the Hidden Channel pullback off the highs.

But if we shoot back up through the highs, then I know this was just a pullback in an overall bullish move, and my focus moves to buying with bear-traps.
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Please remember that economic news, both scheduled and un-scheduled will increase volatility and decrease liquidity in the market in the short-term, which causes price-action to react inconsistently with the levels of support and resistance mentioned in this video. Trading during economic news reports is dangerous and highly discouraged, no matter what your level of experience.
Joseph James, SchoolOfTrade.com and United Business Servicing, Inc. are not registered investment or trading advisers. The services and content provided by SchoolOfTrade.com and United Business Servicing, Inc. are for educational purposes only, and should not be considered investment advice in any way. U.S. Government Required Disclaimer – Commodity Futures Trading Commission. Futures and Options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. cftc 4.41 These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or-over-compensated for the impact, if any, of certain market factors, such as liquidity. Simulated or hypothetical 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 similar to these being shown.


Adam Hall says:

I know it’s not sexy but I trade the Russell. However your teachings work on all charts.

Joseph James says:

The pendulum swing is an effective way to identify the best entry and exit locations during "range bound" markets.

Once you know there the "pendulum swing" is taking you, the next step is to wait for the proper entry pattern and fire away!

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