Parabolic "Strong Market" Trade Techniques
Additional techniques for trading a very strong trend
When the market goes parabolic with a powerful market move, this move is defined by 30-40 bars in a row on your larger chart. Notice the strong look when the prices break several potential termination areas. (see chart below). During this strong run in the market, you may no longer see traditional, 5-1 trend trade rules like in the TREND TRADE RULES SECTION.
Instead, it would be best if you focused on "termination conditions" on the 5-1 chart or T3 Market Flow on the range-based chart for trade entry. Focusing on termination conditions and key areas will assist you in picking up a few of the trades during a parabolic trend that you may not ordinarily get. Stay with the trend to each new Fibonacci area, taking some profit along the way. Eventually, the price and triggers will stop breaking Fibonacci areas. When this happens, stop taking trades in the trend. DO NOT TRY HVA OR ANY COUNTER-TREND TRADES WHEN THE MARKET IS PARABOLIC! "BOTH" triggers rolling in the opposite direction ends a parabolic trend.
The chart below represents the ES from March 31, 2021. The market made a great bottom and then went on a very long run. Notice that the "last" Fibonacci resistance it hit at the top held, then both triggers large and small rolled to the downside. That would be the first time to start looking for shorts.
how to define a very strong parabolic trend
The following picture shows the above chart's strong trend, showing the 3 extra trade entries. The first was a Market Flow long signal (not shown). The second entry was from one-to-ones as a termination spot on the 5-1 chart. The final trade was a "pivot stop out" of a divergence low termination condition on the 5-1 chart. Those 3 extra trades made very nice moves with the parabolic large chart. Entries can be taken just above the termination spots or after a T3 Market Flow Reversal bar. Normally the closer you get into the trade at the termination spot, it will lessen risk and increase the overall reward.
use market flow or termination conditions in a parabolic trend
How to enter and manage a parabolic trend trade using stop orders and how to manage
The following chart is an example of using 5-1 termination conditions to short a parabolic strong trend down in crude oil.
short trades with termination condition entries
Another parabolic example is seen below. This E-mini ES chart was taken on April 20th, 2021
very strong down market-waiting for triggers to roll up before longs is best
The next opportunity from the parabolic trend chart above is seen below with a pivot stop-out entry.
parabolic short entry using termination pivot stop out on 5-1 chart
The "resumption of a trend", as defined by small triggers at Fibonacci areas, may also be used in a parabolic market as an entry criterian.
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