Swing Setups

I’ve been doing a lot of reading on swing trading, especially the blogs of Trader Mike and Taz Trader. Taz Trader’s strategy really intrigued me especially about the area he calls the TAZ.

“The Traders Action Zone (TAZ) is a buy and sell zone on a chart that swing traders can use to identify possible reversals in a stock. This is just simply "area" that we look at to see if a stock that is in a strong uptrend, after pulling back to this area, will likely reverse.” TAZ

This area is located between the 10 sma and the 30 ema. For entry into a stock we are looking for specific pattern once in this area. We are looking for the first candle makes a low, the second candle makes a lower low, and the third candle makes a higher low. This will be clearer once you see the charts below.

I added this scan to the program I’m developing, Market Ninja, and came up with following charts. A new trailing stop needs to be developed as TAZ's exit system wont work for the selected stocks. Initially I'll just put the stop loss below lowest of the three setup candles.

This is just a learning exercise, so hopefully I have the setups correct. I think DMX might be the closest to the setup required as the higher low was below the 10MA. CIR had a close below the 30EMA, not sure if that counts that one out. TAZ Trader does mention he likes the pullback to be closer to the 30EMA and this was the closest I could find. Also be aware some of these stocks have low volume, and after doing some back testing don't perform as well as high volume opportunities, but we'll follow the trades anyway.

COZIRON RESOURCES LIMITED (CZR)



Last close at $0.80, Stop loss $0.74

DOLOMATRIX INTERNATIONAL LIMITED (DMX)



Last Close $1.17, Stop loss $1.08

KIP MCGRATH EDUCATION CENTRES LIMITED (KME)



Last Close $1.42, Stop Loss $1.37.

CIRCADIAN TECHNOLOGIES LIMITED (CIR)



This one has a slightly different setup, but we'll follow it anyway.
Last Close $1.70 , Stop Loss $1.66