4......MONEY on the FLOOR (MOF) .........and the SLINGSHOT

The MOF (Money on the Floor) is a reversal pattern while the Slingshot 
is more a continuation pattern -- but it can also be a reversal pattern. 
These two patterns occur quite frequently. 
They often form simultaneously but can also form independently. 
I learned of these patterns from Buffy's BLine chat room on daCharts.com .

... Slingshot signals are very common indicator patterns...

The MT (MACD EMA TREND)

The BLINE
I hope Buffy from daCharts.com doesn't mind me borrowing her indicator name.
Here's an example of her chart:

Her Bline was based on long term stochastic, my BLINE is based on short term EMA* of TRIX.
It works very much the same way as does the MACD SIGNAL line but is faster to print.

* I consider this BLINE indicator to be more of a continuation pattern than an entry signal...
Good for confirmation that a reversal has indeed occured. 
(see page 4b for another way to setup the BLINE - good for confirming entry signals)
Here's an example of a 2B P/A pattern printing. 
Use the BLINE to help rationalize an entry when the shorter term charts may not 
have real clear stochastic or histogram signals...
When the shorter term BLINE signals fired, notice that the 180T chart had already been
showing very clear signals (stochastic oversold and histogram divergence) ...  

The BLINE indicator prints across all time frames...It can be used as a stand alone signal to front run reversals 
or it can be used in conjunction with other signals as add'l confirmation of trend changes.
(The lime triangles showing in the price pane are BLINE signals)

 BLINE on a Long Term TICK chart...confirming the other "standard, old reliable" reversal  signals:


Thchart below shows MOF and SLING examples as well as a 2B Dragon with 3xD divergence

In the chart below notice that the 2nd shorter orange horizontal segment shows a Trend Line Break Retest entry area that is adjacent to the breakout. The MOF coincided with this retest while the Slingshot was developing (a second and a third Slingshot appear as the new trend continues) ...these two patterns can be used by themselves as entry signals although they are sometimes hard to ID while they are forming. Using Buy-Stop orders above the current bar(s) works well and helps keep you out in the event that either signal fails.

 


The Money on the Floor pattern is very much a Price Action event.  

Very often it is the first HL that follows a 'new' HH...Look again at the price action shown on the above chart - Price put in a new HH at 2792 marked (HH), which was above the level of the 2B Dragon's Hump...then the MOF completed a new HL, which was above the the level of the 2B Dragon's feet... 

Thus the potential for a trend reversal developed: i.e. a new trend from DOWN (shown by the green diagonal trend line on the left) to UP...The new trend continued to throw off signals as it continued. At the point marked (HL-2) there was 2xRD (2-indicator-Reverse-Divergence) as another Slingshot was developing. This proved to be a good place to add to your position.  

Being continuation patterns, the Slingshots confirm that the newly established trend is firmly in place...they can used with confidence to add to an existing position. They can also be used for opening a new position, especially when you have 'missed' an entry that earlier signals presented.  

 In this case,  there were many rational for favoring long positions - 1) the 2B bottoming pattern,  2) followed by a trend line break, 3) followed by a HH,  4) the Slingshot(s) and finally 5) the MOF's HL...now visualize the P/A HH's and HL's that occurred afterwards.


"Late to the party" trade examples...

MOF and Slingshot(s) 

This NQ trade was a Trend Line Break Re-Test entry opportunity...Price had suggested a potential reversal by some  earlier signals : 

 MACD Divergence had formed a bottom which was followed by a TLB .

So entering an order in anticipation of an MOF forming around the TLB Re-Test area, note that an initial stop could have been placed so that it would be under the support level that a 2B Dragon's front feet would afford...Had price continued a little further down  instead of stopping at the MOF level the trade would still have potential as 2B reversal trade...

You can sometimes adjust your "late-to-the-party" trend line break re-test limit order price while also considering where the initial stop should be...In this particular example, the MOF and Slingshot defined how low price went.   

A 2nd Stochastic Slingshot developed later that co-insided with Reverse Divergence as evidenced by the histogram's and stochastic's

 exaggerated lower lows...Price is about to get sling-shotted again...continuing the trend UP.



  The SLINGSHOT

The white vertical line indicates when the stochastic Slingshot became apparent...there was 1xD on the histogram about 10 minutes earlier that might have been played...there was also a MOF shortly afterwards. Either of these signals would have resulted in a good entry and a winning trade.

Remember that divergences and MOF's are reversal signals - they indicate the potential for the start of a new trend . SLINGSHOTs are continuation signals - they can often be used to confirm that a reversal has indeed begun.

(in this example, price came very close to printing a 2B dragon as the slingshot was developing)  

Slingshot identification 

They usually form after a new short term higher high prints and then price retraces part of the move...

The stochastic will be seen to move down toward or into the oversold area while the MACD EMA lines are still showing a positive trend... 

MACD TREND - as an entry signal 

Since they are not apparent until after they form, MOFs and Slingshots are often difficult
 to use as "Late to the party" signals for entering or adding to an existing position. 
Utilize the MACD Trend to help you see the possibilities...

What goes down must go up . . . 
(by how much is always the conundrum)
MACD Trend SLING - - good for front running reversals 
The 10 minute chart on the right is longer term than what I use but the idea is the same. 
Look for the stochastic to start hooking up while the MACD EMA lines are trending up 
(both should be nearer the bottom of the study) 
The potential for breaking a down-sloping trend line is another clue to add to mix as are the longer lower candle shadows. 
In the chart below, all these things can be identified BEFORE the reversal happens.
These can all be seen to the left of the blue vertical line.


BELOW - Slingshots on longer term, five minute based charts of the ES and YM. Note the MOF's and the MACD EMAs trending upwards while the slingshots were forming

Slingshots are Reversal and/or Continuation Signals

Regular Slingshots form at the bottom of down trends when downward price action is reversing direction. I consider these to be Confirmation Signals of the reversal. They confirm that the direction change has indeed taken place.

Slingshots also form when price is already in an established up trend but has pulled back...here they reverse the pull back and are used as Continuation Signals for the established trend. In this case they are confirming that the established up trend is still in place.

03/02/2015 - Combinations of patterns and signals on 2 time frames:

Agent 86 - technical analyst extraordinaire...

"it's the old back-to-back Continuation Slingshot trick"

"it's the old double cup with triple slingshots trick..."

"You might find it hard to believe...would you believe..."

Maxwell Smart, Agent 86 ... on a T/A roll... 


Slingshots as Reversal signals

...at the start of a new up trend...

Slingshots as continuation signals

 ...in an established up trend...



Continuous Sling on two time frames...they may not get into oversold on the longer term chart

Some do's and don'ts with Continuation Slings


4/16/2013   Very short term Continuation Slingshot 

They may not always be perfectly symmetrical or be associated with other signals but they work on any time frame.

  Here's a 30 second chart with some of the drawing tools added...Reverse divergence as price retraced into the BrachZone...this preceded a nice move up allowing an entry on the retest of the trend line break, which is high lighted using the on chart order placement tool available via the 'Trade Mode'.