Intraday index-futures divergence as a three-part session hypothesis

The archive describes a futures method framed for five-minute index-futures timing. The same setups are also presented as usable to time entries on longer horizons.

Daily trend plus pre-marked support and resistance are required context for the five-minute hypothesis. Entries are intended at the opposite session extreme so a failed trade still exits near a defined invalidation.

How the setups are defined

A buy setup is defined when session momentum prints a low that price does not confirm. That mismatch is a divergence. The long is taken only after that momentum turns up.

A sell setup is defined when session momentum prints a high that price does not confirm. The short is taken only after that momentum turns down.

Session highs and lows are treated as the reference extremes for both the setup and the protective stop. On a buy setup the session-extreme-stop sits at the session low. On a sell setup it sits at the session high. The hypothesis is falsified if price later confirms the momentum extreme.

Fast and slow stochastic as the momentum gauge

Both a fast and a slow stochastic-oscillator are used as the session momentum gauge. The slow line is treated as the stricter, lower-frequency filter. The fast line is the more frequent but noisier alternative.

The archive describes the slow stochastic as producing fewer trades and a closer session-extreme-stop on the sell setup.

Breadth as a veto after entry

Market-breadth is refreshed on the same five-minute interval as the chart. It is used after entry, not to originate the setup.

Strengthening breadth supports holding. Weakening breadth tightens stops. A near even reading is treated as a cue to take profits quickly.

The strongest breadth confirmation described is a swing from one participation extreme to the opposite extreme rather than a reading that stays near balanced.

Adds only after the next wave

Adds are taken only after a position is already deep in profit, using consolidations such as bull or bear flags. Each add is a fractional-add, kept smaller than the original so the breakeven price does not chase the market.

Editorial note: TradersWeek maps that wait to an abc-wave. After a confirmed divergence the trade is meant to ride a three-leg sequence: an initial move, a counter-move or pause, then a continuation. The add belongs on that continuation, not on the opening print of disagreement.

When the session is choppy

When markets are described as choppy, directional size is reduced and quicker profits are preferred. The same setups can still be used to stand aside or exit without being forced into a full loss.

That choppy-regime is the counterpart of a near even participation reading. Directional adds are reduced or skipped because setups fail to extend.