Three Lane Highway Formation ZT

The three lane highway is when you have at least 3 time frames moving in the same direction. For example, a 1-minute, 3-minute, 8-minute and 13-minute all going down sets up for a stronger sell off. Eventually the 1 and 3-minute stochastics will bottom first and usually will bounce back to resistance levels on the 8-minute first and then the 13-minute. I always tell traders that share allocation is the most important thing. If you are someone who is comfortable scalping BRCM with 1,000 shares then you will be making sure that you prioritize that 1 and 3-minute chart to scalp out. If the 1 and 3-minute charts are exhausting on the sell off but the 8-minute charts is still down-trending, then you want to pare out profits to an 8- minute time frame share size. This is because the 8-minute is a wider time frame and has a wider range and stop. With the 3 lane highway, the more patient you are, the bigger your gains can be. However, you must allocate correctly.

What is the optimal time frame to spot a three-lane highway? Always start with the 13-minute and 8-minute charts -- that’s two lanes right there. Once they move in the same direction, the shorter time frames fall in line like a domino effect. 

Don’t fight the 8 and 13-minute charts. Filter and be patient enough to wait for the 8 and 13-minute charts to converge and time your entry with the 1 and 3- minute charts. Stick to three lane highways and prime setups as these are the bread and butter plays. Most importantly, don’t waste trades in consolidations and tight and light periods.