(Click on image above to enlarge it.)
Here at the daily level, we can see that there was an NMC2 and NXC Zero Hit which formed on 8/21/08 (magenta arrows in 2nd and 3rd sub-graphs), the Thursday before the weekly setup developed on Friday 8/22/08. NMC2 Zero Hits are usually very powerful, and when they occur in conjunction with an NXC setup (usually quite rare), they tend to be extremely reliable and potent even when they form on a single time frame.
As we know, when multiple time frames are creating simultaneous setup signals, the move is likely to be swift and powerful. This is a classic example of just such an event. The real beauty and benefit of multiple time frame agreement is that the trade can usually be initiated on the basis of the lower time frame setup where there is typically much less risk, while using the magnitude of the higher time frame setup to anticipate a much larger potential profit from the trade once it gets underway.
At its core, most successful trading is based on trading in the direction of the larger time frame trend while minimizing the required risk to execute the initial trade entry. Multiple time frame Ocean setups offer precisely this type of opportunity.
Then once the trade is underway, finding additional low risk entry points allows you to compound the returns with minimal additional risk. By the time an add on trade sets up, there is usually plenty of accumulated profit available to use the cushion of the open equity to finance the additional subsequent trade or trades.
For instance, note the NMC and NXC add-on setup and entry that formed in late September (red arrows), after prices had already declined fairly substantially from the weekly Cross Kiss. Note also that this add-on setup developed just prior to the steepest portion of the waterfall decline. This too is very typical of how Ocean add-on setups and prices behave during a strong trending move.
Also note a trend line connecting the July and August tops and extending forward to the Sept. Zero Hit top. When trend line analysis can be used to substantiate zones of support or resistance at locations pinpointed by Ocean analysis, they can become helpful in making trading decisions.
The trend line connecting the prior known tops in July and August provided an almost perfect resistance zone for the Zero hit in late September, especially considering that prices rallied right back into the "sandwich" zone of resistance formed by the Fast and Regular Ocean moving averages (green and magenta lines on prices). This dual confirmation, one mechanical and one mathematical, makes the trade setup much easier to understand.
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