The Arizona Rules - Rob Booker

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Phase #1: The “Tucson” Phase If a candle hits the 800 SMA, we are in the Tucson Phase, no matter what. Period. No matter what else we see on the chart, we are in the Tucson Phase if a candle hits the 800. Did I just say that twice? In the Tucson Phase, we can trade any type of divergence that we see. Long or short, it does not matter – we can take it. You use the standard divergence rules you learned from the Stochastic Divergence system, with this one alteration: Your profit target on a Tucson Trade can be a moving average – any of them – instead of the colored candles. Figure 2. A candle (circled in blue) hit the 800 SMA. This means that divergence trades are switched on, that we can take them, that we are excited about them and that we jump up and down when this phase begins. I love divergence! NOTE: When trading divergence, you may want to use the following alternate settings for the Stochastic and MACD: MACD: 30, 65, 23. Stochastic: 30, 10, 10. These settings produce better divergence trades. Page 10 of 26
Phase #2: The “Flagstaff” Phase, Part 1 (the Sell Trade) In the chart below, the 62 has just crossed above the 800. The 200 has not done so yet (on the far left of the chart). And boom! We get a divergence trade that tells us to go short. It’s only divergent on the trigger lines, but not the histogram. Who cares? That does not matter. We take the trade and we hold on, because according to the Flagstaff Phase, we are going to get a lot of profit. We want to try to hold on until the pair hits the 800 SMA. This phase is simply a Tucson-like trade, but the candles are so far away from the 800 when the trade fires off, that I wanted to call the phase something different. Remember, a Flagstaff Trade is just a divergence trade, and I don’t call it a Tucson Phase because the candles are now so far away from the 800 SMA. Figure 3. This is the second type of divergence trade that you can take. The next figure will show you an example of divergence on the opposite side. Page 11 of 26
Page 1 and 2: The Arizona Rules Copyright © 2007
Page 3 and 4: Why “Arizona Rules”? In October
Page 5 and 6: Prerequisite Knowledge Do not proce
Page 7 and 8: Chart Setup, continued. Figure 1. T
Page 9: Market Phases In the following page
Page 13 and 14: Stops, Part One: Stopping out of Tu
Page 15 and 16: Phase #3: The “Phoenix” Phase,
Page 21 and 22: Page 21 of 26
Page 23 and 24: Stops in the Phoenix Phase The 62 E
Page 25 and 26: Phase #4: The “Yuma” Phase, con

The Arizona Rules - Rob Booker

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