This chart of TZA shows classic chart formations giving both a buy and a short entry. Early in the 12/27 session, the price (first) then the 25/5 LRCs (yellow and green lines) crossed over the 50/10 LRCs (grey and purple lines). Then price pulled back to the 50/10, broke the volatility stop (orange dot) and flipped it to the lite blue upper V-stop. A buy could have been placed near the grey line with a stop below the pivot where price poked thru the purple line but failed to close below it. This would be a lower risk and higher reward entry than the more conservative entry when price went up and closed above the lite blue V-stop.
The same situation but reversed happened near the end of the day. The break down thru the 50/10, pull back to the 50/10 (formed a double top in this case). then a break down thru the orange V-stop.
LRC is linear regression curve with a moving average of itself. A 25 period LRC with a 5 period MA. Also used is the same with 50 and 10 period.
The Volatility stop is based on ATR, average true range.
Notice the important comfirmation of the Ergodic indicator turning up strongly in positive territory on the buy and turning down strongly below the zero line for the sell (short). Also the +DMI above the -DMI on the buy and the opposite on the sell/short side. The ADX crossover when > 60 is a precurser signifing a potential end of the move.
