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Trading a Momentum Market Using Swing Trading Techniques from Mohammad Daniyal's blog

To swing trade a momentum market you need to understand the dynamics of not only swing trading, but also how momentum action behaves, how it is different from a velocity price action, and how it is NOT volatility as many will claim. It is ENERGY that continues in one direction with building volumes and rising prices followed intermittently by resting day patterns rather than retracements.


Momentum price action is unique and learning to read these charts requires far more understanding of candlestick patterns than is taught in books written a decade ago. Within the past 3-5 years the way price reacts, how and where candles form, for how long, and when price will suddenly move again has changed dramatically. Just learning the candlestick patterns in a book or from an article online, is not sufficient for highly successful swing trading in momentum markets.


Indicators that expose the Dark Pools buying are most important to use in your analysis. Often they are buying into new technologies. Some of these indicators are Balance Of Power BOP and Percent Shares Held by Institutions PSHI which reveal when large lots are being purchased in Dark Pools. When the large lot Institutional Investors buy in Dark Pools, price by itself doesn't look like anything is happening much in the candlestick pattern. However the energy that is generated when Dark Pools buy incrementally without moving price, causes big runs to follow. This is because the news "leaks out" of their buying, and computer generated High Frequency Traders HFTs chasing after the Institutional Investors causes momentum runs.


Buy Side Institutional Investors are the giant Pension and Mutual Funds. When they buy "Shifts of Sentiment" increase volume patterns, building underlying energy. These vital cues stocks ticker sentiment tell you the resistance level is going to be blasted right though. This time resistance will not hold back stocks moving out of a long term bottom, which was created by the large lot Institutional Investors buying in the Dark Pools.


The crucial analysis you need in order to find stocks BEFORE they move suddenly, running or gapping up quickly, is Relational Analysis which is the interpretation of the relationships between price, volume, lot size, and who is trading the stock at that time.


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