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January 11, 2013 2:56 PM
HAPPY NEW YEAR 2013!!!
Most traders hate Friday trading. Specially in the after noon hours. It is incredibly slow with choppy action. Traders should be smart to quit trading on Friday. I thought I am, but today I got caught in the Mid-Morning trade around 10.45am. I saw a good ABC Bullish pattern with lots of great conditions. On the first attempt it tried to reverse and close above EL (1463.75), I bought a position around 10.50 am at 1464. My Targets are: 1467, 1470, stop set at 1462. After my trade, market rallied a bit but Friday trend was unforgiving. Now at 2.50pm, it is chopping between 200-SMA and EL (1464). Few minutes before it rallied to 1466.25 but dropped back to 1464.5. This has happened too many times. Now, I raised my stop to B/E. I should keep a note: Never trade Friday from Noon.
Wish you all great weekend.
December 28, 2012 11:59 AM
Trading large patterns is a bit risky. My definition of large patterns are patterns with Major swings of patterns with 15 pts or more. Of course, it has larger targets but it also has Larger Stops, which may or may not fit into many traders trading plan. But there are some tmes, Larger patterns with Volatility around the entry have smaller stops (by design). This way if Pattern is WRONG, you can get out of trade with a smaller loss.Today’s ABC presented such an opportunity.
From mid day yesterday (Dec. 27, Thur.), ES rallied from a low of 1396 to 1416 on “fiscal cliff” news. This swing (AB Leg) is 20 pts in the ABC pattern. The BC retracement (overnight) was 16 pts. These type of ABCs will have larger targets and larger stops. At the open, ES showed this pattern completion. I was watching Opening VLTY and it is over 60. I usually wait for price to settle (VLTY < 50) in the first hour and wait for trade trigger. Today VLTY also helped for a better entry and smaller STOP (EL to C). I was not still convinced at the OPEN and waited until 9.50 am to start looking closely for a trade setup.
Around 9.55am, I entered LONG at 1403 with a Strict STOP at 1400 and NO-more adds, incase if I am wrong. As expected, Large ABC has Larger profit levels. So, my first Target was set 38%AB level at 1407 and next target is set at 1411 (just before 62%AB).
Around 10.30am, VLTY was slightly above 50. After sudden drop from 200-SMA, ES broke above 200-SMA to hit my first target: 1407 (+3 pts). I moved my STOP to b/e for the rest of the trade. About 10.50am, my trade was closed at 1411 (+8 pts). I still think this pattern may move much higher later in the day.
December 21, 2012 4:33 PM
ABC is one of the most universal pattern. This pattern is the most simple pattern but very powerful as it is part of at least 10 other patterns like Gartley, Butterfly, Double Bottom/Tops, Dragons, H&S and Inv. H&S etc. In Double Bottom patterns, the two bottoms are never really equal and may have 5 to 8% difference in their depths. So, these Double Bottom patterns also form Dragons with distinct hump and two legs. Both these patterns have ABC
embedded in it. The confluence of these patterns gaves a great opportunity to trade from Long side using ABC as a guide.
Today ES sold off from overnight on fiscal cliff news. ES traded about 50 points down overnight but recovered 30 points at the open. This morning I was patient to develop any potential patterns to trade. Around noon, I started noticing price is entering into the extreme Support Zone (Fib. Zone Pivots) of 1415 to 1418. Fib. Zone Pivots do provide great support and look for any patterns to develop to trade. Around 12.50pm, I noticed price is forming a double
bottom pattern in the FZP and started to breakout. This pattern also has Dragon setup with a smaller ABC inside. Trading these patterns strongly supported by the FZP is an excellent opportunity. I also watched CMI and other VLTY. VLTY is safely below 50 and CMI3 was green and CMI5 was nearing GREEN setup.
ABC Bullish pattern signaled EL (Entry Level) at 1419 with a stop at 1416.5. Targets were 1421.5, 1424. Around 1pm I entered a Long trade at 1419 with a STOP at 1416.5. At 2pm, I exited my trade at 1421.5 (+2.5) and 1424 (+5 pts).
December 19, 2012 6:00 PM
December 19, 2012 4:33 PM
Head and Shoulders Pattern with Market Context
Market Context is one of the most important concept traders should master before they start trading. Most traders have some concepts of Market Context… If price is above 50 EMA or 200-SMA and price is trading above Pivot or below Pivot etc. But solid understanding of Market Context makes traders confident in trades. Every trade I study and plan, I must clearly know what Market Context I am trading… I trade Price Patterns with Market Context. Market context validates, shows where entries and stops and where to place targets. If Market turns against the trade, I would even have a plan of where my theory fails.
Today afternoon around 1pm, I started seeing a Head and Shoulders Pattern develop in @ES. I started to notice CMI on 5m gave a sell signal about the same time. ES was trading around 1440. I started watching the market price action and wanted to trade below the Neckline of H&S at 1437. Another key element I noticed was today’s Opening Range and the First Hour Low was set at 1437.
This combination of level 1437 (Neckline, First Hour Low around Floor Pivot) gives me a strong H&S trade. I initiated a SHORT trade at 1437 with a STOP of 2.5 pts (1439.5). My Targets were set by measuing Head to Neckline. The fib. ratios of this length below Neckline sets my targets: 1431.5, 1430 and 1428.
About 30 minutes into my trade, ES traded below 1434 and reversed its trend and traded above my Short price. I have 2.5 pts STOP at 1439.5. ES traded at 1438.25 but again it reversed in my Short direction. I knew this time I wanted to close at least part of it around 1434 (+3 pt). Then I kept my next target at 1431.5 and moved my STOP to 1437. (B/E).
By the end of day, my next target was hit at 1431.5 (+5.5 pts) . My previous target gained (+3 pts). I think H&S will work further down overnight and trade below my exits (1431.5).