On March 18, 2013 the market gapped down overnight due to news in the country of Cypress. Take a look at the E-mini S&P at around midnight, US/Eastern and you’ll see the gap. The news was that the Cypress government is assuming control of its citizens’ financial assets. As one might expect, this created a large, downward move. The bias created was to sell the market. Even though your bias may be to sell the market, it’s still important to take a look at what the price action is saying to us. From midnight onward, price instead made a steady climb to around 1539 at 9:30 a.m. US/Eastern in the E-mini S&P.
The Dbl Bar Long signal was generated at the close of the red candle (1542.75) at 9:55 a.m. US/Eastern. The rest of the day until around 2:30 p.m. This goes to show you that listening to news to get a direction is not always a good strategy. When price intersected the Atlas Line and had two closes below it, a Dbl Bar Short signal was generated at 1545.5. The ATR allowed for a profit of 1.5 to 1.75 with this second trade. At about four minutes into the video, John Paul shows the Euro which had a very strong rally right after the Atlas Line’s long signal. Price action is best tool for helping you decide where the market is headed; especially in conjunction with the Atlas Line.