Angles of Ascent

BarroMetrics Views: Angles of Ascent

In this Blog, I review ‘angles of ascent’ as a tool for measuring momentum.

As a general rule, I seek to avoid indicators in my trading. So, I don’t use momentum indicators like RSI, MACD etc.  Instead to assess momentum, I prefer to use ‘angles of ascent’ as shown by the Linear Regression Line.

In an uptrend, there are 4 main angles:

  • 12:00 – 1 (unsustainable thrust)
  • 12:05 – 2 (normal thrust)
  • 12:10 – 3 (below normal thrust)
  • 12:15 – 4 (sideways trend)

In a down trend the angles are at:

  • 12:30 – 1
  • 12:25 – 2
  • 12:20 – 3
  • 12:15 – 4

In uptrends, you are unlikely to see perpendicular moves (position 1). A Linear Regression Line that is between 12:00 and 12:05 is so steep, you are likely to see either a pause or pullback before making a new, final high. In position 2 (normal momentum, 12:05 and 12:10),  you may or may not see a pause or pullback before a final high. In position 3 (12:10 to 12:15), the slope shows a sloppy directional move and probably you will see a sustained sideways move before making a new high.

The trade I made on the AUDUSD yesterday illustrates how I use the angles.  For reasons, I won’t go into here, I was keen to sell the AUDUSD. Figure 1 shows  my entry zone as being the Primary Sell Zone in the potential sideways action. My stop for the trade? Above 0.8615

Figure 2 shows a 15-min chart with Linear Regression Bands. At ‘A’ I had a setup and entry within a zone. But I did not take the trade because Linear Regression Line did not show a decrease of momentum in the (1) position. When the market gave a sell signal at ‘B’ (see Figure 3), we see that the Linear Regression Line showed a decrease in momentum. When the entry setup and trigger came, I was happy to take the trade.

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FIGURE 1 290-min AUDUSD

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FIGURE 2 15-minute AUSUSD

2010-07-07-blog-15-min-adus.jpg

FIGURE 3 15-minute AUSUSD

3 thoughts on “Angles of Ascent”

  1. Hi Ray,

    Thank you for sharing. For an 18d trader, in what time frame do you suggest we use the angles? Thank you.

    Rob Nicholas

  2. Hi Ray.

    interesting comments about momentum and angle of LR line. I follow the principle but can’t figure out how you calculate the angle measurements – can you possibly elaborate how you calculate them.
    thanks

    Peter Whitnall

  3. Hi Rob

    Thanks for your comment. Apologies for the delay in replying.

    For an 18-day trader, use the angles on a daily chart.

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