Here's another example of how multiple time frame Ocean setups and signals can line up to create incredible risk to reward trades.
As we stress throughout these examples and in the Ocean Workshop, long-term success and consistent trading profits are usually the result of intelligently analyzing multiple time frames for supportive Ocean formations, while always attempting to minimize the risk. This trade in EchoStar vividly demonstrates how logical, simple and achievable that process can be.
This weekly chart of DISH shows how Ocean responds to a market changing from bullish to bearish trend. Prices had risen through Jan. and Feb. 2004, and then promptly reversed in an inverted V type formation, with a violation of the Fast NMA in late Feb. (down arrow above prices).
Note also the simultaneous crossover of NMC from above to below zero (middle pane), indicating a market turning bearish. The bottom pane shows the Ocean NMS tool having met resistance at its NMA (shown with arrow), and a cross below its Fast NMA and the zero line on the following bar.
Within a couple of weeks, all of these bearish events are followed by an NMC zero hit from below, indicating an Ocean sell setup has formed (week ending 3/12/04, marked with down arrow). In fact, this type of sell setup from NMC is one of the more potent formations that we teach, and is called a “Cross Kiss”.
Notice how NMC remained above zero, then crossed below the zero line and almost immediately generated a ZeroHit from below. This is a powerful Ocean event on any time frame, and when it appears on a weekly chart it's time to roll down to lower time frames to see if there's a complementary signal where a better entry price can be identified and trade risk reduced.
(This is the end of Part 1. Go to Part 2.)
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