Part 16 - The actual top

We need a mechanical way to find our tops and bottoms, without this we are guessing...sure we may get it wrong but if its mechanical we should get it right more times than its wrong and that’s all we are after.. we want to stack the odds in our favour even at this stage of our signal selection process

Have a look at the chart below,

Now lets look at what actual happened...see below

And here is why i knew to leave it alone, we use a stochastic momentum indicator set to change colours on ticking up and down. lets look at the same candle action again.

As you can see to take the trade here rt to even consider it would of been a big mistake the stoch is telling us there may be more upside. Lets move to the actual signal that took place a few minutes later .I will pick out the entry but as yet you do not know why it was at this exact point.

We know just one thing we have had a technical double top and the stoch is saying 'I think there is no more upside at this point' - see chart below

To use the Stochastic momentum indicator to find the high candle its very simple.

• We find the Stoch peak ( where blue change to red for shorts)



• We then move back candle by candle until we find the highest high .. and I use the high of the candle ie the top of the wick.



• As soon as we get a candle that has made a lower high WE STOP

Look at the example below.