In this chapter, we'll show a series of examples of trading with the Bressert template, each starting with a chart and followed by an explanation of the trade.

The session opens in Figure 7.1 with the MACD and stochastic momentum flat to slightly down and the Bressert moving lower. The Bressert quickly reverses and moves higher, but there's no change in the other indicators.

About one third of the way into the session, the Bressert has peaked for a second time and begun to fall. At the same time, there's a breakdown in the stochastic momentum and MACD. The only shortcoming to this setup is that there isn't a decisive bearish crossover of the fast lines through the slow lines in the stochastic momentum and MACD. Still, this is a valid short-trade setup.

About midway through the trading session, the selling momentum has eased and the market again turns and goes higher. The Bressert is the first indicator to turn and is quickly followed by the MACD and stochastic momentum. This is a solid 80/20 trade from the long side.

On the right side of the chart, at the very end of the session, all three indicators move sharply higher at about the same time. I wouldn't take this trade because I almost never carry positions overnight. It's a risk I'm unwilling to take. However, if you are trading on a longer time frame, you may want to take some end-of-day setups. If you are interested in holding positions overnight, you should establish off-hours trading stops.

Early in the session in Figure 7.2, there was a good trade to the downside. After peaking initially, the Bressert broke early, leading the way. The MACD and stochastic momentum quickly confirm the move, giving you the justification to place a short position. The market moves down quickly. I would get out of the trade while the momentum is still in my favor.

About one third into the session, the MACD and the stochastic momentum start moving up and continue moving up for the duration of the chart. However, the Bressert indicator is moving down during the early part of the session at the same time the MACD and the stochastic momentum are moving up. Eventually, the Bressert bottoms out and begins to rise. This is the time to take the trade.

This is a slow-moving trade, with the market moving sideways initially. The market does not break down, however, so you could hold this trade with a close stop and get a good portion of the up move.

Midway through the session in Figure 7.3, the MACD and the Bressert start down at about the same time. The stochastic momentum indicator quickly follows, producing a good trade setup. The key is to strike quickly once the trade is confirmed. The market trends lower for three consecutive bars, giving you the opportunity for an immediate profit on the trade.

Late in the day, there's a short trade as the market begins to drop. The Bressert moves first, with both the fast and slow lines breaking simultaneously. The MACD and the stochastic momentum indicators quickly confirm the move. If you strike quickly here, there's a nice potential profit. However, even if you're a bit late, it still is a good trade.

Through the first two fifths of the session in Figure 7.4, the MACD and stochastic momentum trend lower. The Bressert is somewhat volatile. As long as the MACD and stochastic momentum are in a bearish mode, you want to look for confirmation from the Bressert to put on a trade. Specifically, you want to see both Bressert lines moving in the same direction to confirm the trade.

There are two instances early in the session where all three signals are moving down. In the first instance, about one fifth of the way into the session, the MACD and stochastic momentum are declining at a weak angle and the Bressert is moving down. Note that you don't have a decisive bearish crossover move with the MACD and stochastic momentum at this point. This is more of a 60/40 or 55/45 trade. I wouldn't take it. If you do take the trade, you need to be in and out quickly. The Bressert then reverses, rallies, and starts falling again. At this time, the MACD and stochastic momentum break sharply down. This is a solid trade that enables you to profit from the swing high and the ensuing move down.

Shortly thereafter, both lines of the Bressert bottom and move sharply higher. Then the fast lines of the stochastic momentum and MACD turn higher and cross the slow lines. This is a high-probability long-side trade.

About four fifths of the way into the session, there's another bullish setup, similar to the previous trade. The MACD turns higher and is quickly followed by the Bressert and stochastic momentum.

This is not an easy period to trade.

The market spikes higher as the session opens in Figure 7.5. The move happens so fast that there isn't any time to even think about trade using my methods.

The market then flattens and about one third of the way into the session, the MACD and stochastic momentum slowly trend down. The fast lines of the MACD and stochastic momentum cross over, creating a bearish situation. By this time, however, the Bressert has bottomed and flattened out. I don't see a good trade here.

Interestingly, each time the market tries to go up through the remainder of the session, the momentum as reflected in the MACD and stochastic momentum is progressively weaker.

About halfway into the session, the fast lines on both the MACD and Stochastic Momentum cross the slow lines and both indicators begin to accelerate to the downside. Based on our criteria, this is a good trade to take. However, the market stays flat to slightly down for quite some time. If you held on to the short position, you would eventually be rewarded. If you liquidated the initial short position for a small profit or scratch, you could get back in about four fifths of the way into the session when all the indicators break at the same time.

The session opens with the market fairly flat in Figure 7.6; however, the MACD and stochastic momentum are trending upward, while the Bresert is cycling down. Clearly, there is no trade to take here.

About one third of the way into the session, the Bressert turns up. And the stochastic momentum, after going flat, renews its bullish trend. This is a good 80/20 set up.

About three fifths of the way into the session, the Bressert begins to decline and the MACD and stochastic momentum quickly follow. This is a reasonable trade to take, although the market spikes up slightly before it begins to decline.

Early in the session in Figure 7.7, the MACD line crosses the signal line, the stochastic momentum fast line crosses the slow line, and the Bressert indicator turns sharply up. With all three indicators showing decisive bullish movement, there is an 80/20 trading setup.

Midway into the session, the market peaks and starts to descend. All three indicators flash sell signals: the MACD line crosses below the signal line, the fast line of the stochastic momentum crosses below the slow line, and the Bressert indicator drops very sharply. This is a great 80/20 short-side trade.

About one third of the way into the session in Figure 7.8, there's a nice downward break in all three indicators. Notice that the Bressert is the first indicator to turn and is quickly followed by crossovers in the MACD and stochastic momentum indicators. This is a good trade to take.

A little past halfway into the session, there are bullish crossovers in both the MACD and stochastic momentum. Shortly thereafter, the Bressert begins to cycle higher. This trade gets you in at the beginning of a long price swing.

Late in the session, the MACD and the stochastic momentum begin to decline and experience bearish crossovers. Following a weak upside cycle, the Bressert begins to cycle down. The trade works for a few bars before the market reverses. You need to be nimble and exit quickly.

After an early up move in Figure 7.9, the market moves in a flat to slightly down pattern. The Bressert cycles down, and after a few more bars, the MACD and the stochastic momentum begin to move lower as well and generate downside crossovers. As you can see, this trade works out very well.

About one fifth of the way into the session in Figure 7.10, there are bullish crossovers in the MACD and the stochastic momentum. However, the Bressert by now has flattened near the high point of its range. There's no trade here.

After that, the Bressert quickly cycles down and begins rising again. So, at this point, all three indicators are signaling that the market is going higher. This is a good trade to take.

About four fifths of the way into the session, both the MACD and stochastic momentum touch their reference lines and accelerate higher. The Bressert is also cycling higher. So, again, you have a good long-side trade.

Toward the later stage of the session in Figure 7.11 is a very good trade setup. Notice first the bearish divergence when the market makes a new session high, but none of the indicators follow suit. The MACD, stochastic momentum, and the Bressert all make lower highs. This is a powerful sign that upside momentum is exhausted and the market is ready to decline.

Shortly thereafter, all three indicators turn sharply lower. This is a very clear 80/20 setup. You should have no hesitation taking this trade.

The session opens with the MACD and stochastic momentum displaying a bearish tone in Figure 7.12. But the Bressert—after cycling down—is flat, so there isn't a high-probability trade here.

The market then remains in a fairly tight range. The Bressert cycles up and then flattens. The MACD and stochastic momentum are also relatively flat.

Finally, the market gaps up on the opening of a new trading day a little past halfway on the chart. The Bressert cycles upward and the stochastic momentum and MACD both turn sharply higher. While I normally don't trade this close to the opening, I consider this an 80/20 trade given the strength in all three indicators.

A multiday session covering seven days of trading is seen in Figure 7.13. At the outset, the Bressert is rallying, while the MACD and the stochastic momentum are declining. Nothing to trade at this juncture.

On the 12th, about one fifth of the way into the chart, the market gaps up and all three indicators flash bullish signals. I would take this trade. The market slowly grinds higher the rest of the day, and you could get out at any time before the close with a small profit.

On the 13th, about one third of the way into the session, the MACD, the stochastic momentum, and the Bressert all turn down. Again, I would take this trade. Note that the market goes flat the rest of the day. You might have scratched on this trade or made a small profit or loss. While the trade didn't work out, I would take this type of setup time and time again.

About halfway into the session, on the 14th, the market is in a tight trading range for the third consecutive day. However, the MACD and stochastic momentum continue to show weakness. The Bressert also is weak early in the day, and with all three indicators pointing down, a short trade is justified. Unfortunately, if you're looking for a quick profit like I do, this trade would also be a scratch. If you have a slightly longer-term perspective, you would be rewarded as the market breaks at the end of the day. Indeed, if you're flat going into the last couple of hours of trading, there is a great short opportunity as all three indicators again flash substantial weakness.

The next good trade occurs around midday on the 16th, about three fourths of the way into the chart. The MACD, the stochastic momentum, and Bressert accelerate higher. The bullish condition and rising prices persist into the next day.

There are two 80/20 trades displayed on the chart in Figure 7.14.

About one-fourth of the way into the chart, both lines on the Bressert begin to move up. At that point, the MACD and stochastic momentum are in the process of bottoming out. When the fast lines on both of these indicators cross the slower lines (note the Bressert is still bullish), you can go long. The trade works out very well.

A little past halfway into the session, the Bressert begins to move sharply down. A little while later, the fast lines on the MACD and the stochastic momentum cross the slower lines, creating a clear short-trade setup.