Jacobs Ladders is a pivot based trading system that provides perspective on high quality, profitable trade setups for day traders. The purpose of this blog is to educate day traders on this trading system and provide links to the levels on a daily basis. You may wish to bookmark this page.
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The objective of the Jacobs Ladders is to help day traders identify and capture a minimum price movement between any two adjacent pivot points. This system when used correctly will improve the consistency of winning trades and helps minimize risk and losses.
In this weekly blog series, I will point out set ups that occurred during the past week that are illustrative example of how to use Jacobs Ladders for day trading. These examples have been tweeted out on our public twitter feed, you can follow along here @the_artofchart.
For more educational information, please see the previous introductory post introducing Jacobs Ladders day trading system which can be found here.
Example Setup – Emini S&P 500
The Emini S&P 500 (ES) continued trading in a tight range except Thursday. It was a week of buying the back test of Open price level and staying long, with most days hitting level high. Even with the small price range, our levels provided the correct price map for the day at 10 AM. There were many text book set ups and here are couple of noteworthy charts.
Observing Conversion of level
A level by default when tested from below for the first time is resistance and tested from above is support. But it does not stay that way. when price move up, resistance breaks and coverts to support. And vice versa for down moves. It is easier to get with the trend than fading it at each next level. To achieve this, one must keenly observe the conversion of a level.
My objective is to provide support resistance level and I don't provide trade recommendations. What I say here shall not be considered as trading recommendations - they are educational explanations of how my levels work. Given a support/resistance level, every trader should have some trading rules around it .
I would like to explain the rule I personally use to observe such a conversion. Let the price print three handles on a five minute chart above a converted price. In other words 15 min of price staying above converted price. Take for example a conversion of a resistence level, does the price pierce above and print three clean five minute bars above the level line? By clean I mean, it can not be half below and half above the price level. Sometimes price some times does not linger for 3 bars, it could just trend up fast. This is where your personal judgement come into play.
Why do this? Because by attempting a long as close as possible to the level price, even if price drops, the chance of getting a back test and scratching the trade is very high.
Here is a good example
Crude Oil Inventory reports
Crude Oil (CL) on Wednesday often gives a nice move after oil inventory report is released. Price typically moves fast, so blind fades are bad. But wait for a pause because price always latches on to a level, that usually provides a nice day trade.
Trade well next week!