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pjohnm
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Everything posted by pjohnm
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I've found the mid points of the various waves a good indicator of where S/R may next form, so R is at 39/40 and S is at 21 and then 12. Beyond that, S could probably form anywhere below 12 to 00, given that bottom of the range has not been violated. Above 40, we have already broken the 48-50 zone last week, so I would adopt a wait and see approach. If, for example, price breaks above 40, I would look at the reaction from wherever price stalls to the mid point of that upmove and see if something interesting happens there.
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The immediate levels of interest for me this morning: S at 12 Trading Range at 26/31 MP of uptrend at 22 Potential R at 40 +/- but not yet tested Price is now hovering at the MP of the TR, so wait for the test of 26/31 and judge whether there is price behaviour that can be traded off. Note that buying waves on the 1 min are now getting smaller.
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Given that todays open presented an almost identical set-up to the previous days open, I thought this chart would be worth posting as a comparison. The placement of R and the reason for taking the short should be obvious, but the question is what to do thereafter. Having spent the past half an hour tieing myself up in knots regarding entry and stop placement, I'm just going to post the chart for future reference.
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The plan for today: Go long at a succesful test of 11 / 9 Short failure at 9 SAR at 2700 / 2722 if there is a reversal signal Take BO's of extremes if not already in position The opportunity to take a long at 11 came during the pre-mkt, and from there price rallied to 22 at the open, failed to follow through with a HH, reversing to 17 before attempting a test. The test was in fact a LH, and the LL presented a short entry op. (1.5 pt profit) Price instead found buyers at 14, broke the SL, returned to 20 and came to rest at the MP of the opening activity. This to me therefore, was not another short op. Re chart 2 Price appeared to make a short lived hinge, and from there, made a HH. This time, there was a follow through and a long could be taken, with an exit and the break of the dl. (2 pt loss) Price broke the dl soon after and congested between 21 and 24, the resolution of this provided another short op (exit at sl brk / breakeven). Chart 3 Buyers made another HL at 20 and the breakout from the previous congestion area provided another long op, this time at the HH following the pullback. (0-4 pts depending on where you got filled and trade mgt tactics) Worst case estimate, 4 trades, 0.5 pt net loss before charges etc
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Price moved from the High yesterday at 2724 to the Low at 2698 and has sinced bounced up through the MP at 2711, reversed at 21 overnight and has now tested 11 from above pre-open. The move up from yesterday's low at 2698 to the overnight high gives an MP of 2709. The extremes for today then are S at 2700 +/- and R at 22 +/- The plan for today: Go long at a succesful test of 11 / 9 Short failure at 9 SAR at 2700 / 2722 if there is a reversal signal Take BO's of extremes if not already in position
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My preference is to use the the 1 min for determining swing points, sl/dl's and trend, so 2615 would need to be breached to confirm reversal of the trend, which as you say is too late for entry. Entry at 10 therefore can only be considered if it is pre determined S, where I would then switch to a tick chart. The entry drill as far as I'm aware is wait for a successful test (such as a HL or DB), and enter above price. As DB says, the move to 2615 is your first indication of rejection of the trend, as previous swing points are broken on the tick (or on the 1 min, a HH after 10). You then get a HL, above which you have placed your entry, I would prefer waiting for price to to make a sequence of HH and HL's on the tick.
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Hi Tup, having spent some time watching tick charts, I like to see a sequence of HL's and HH's, the only problem I would have with your first green entry is that price fails to make a HH at 2613 after making a HL. As for whether you are looking at a reversal, I would want to see either the swing high at 2615 broken, or a change in behaviour like lessening momentum (sl's fanning out). The second entry would fit this criteria, but again would prefer to wait for a HH after the HL. I agree with your comment on using tick charts for entry though, I believe this is essential.
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My trading plan posted in the TIF thread before the open was was pretty straightforward, in summary go long on confirmation of strength above 60, ditto short below 60. My target for the longs was 88, and the chart shows the long opps following the test of 63 post open. If the ret is taken at 67 (see Nik's tick chart post) and the tactic is to wait for the first swing point post open to draw the dl, then the options are to exit at the dt and break of dl at 73, or hold until the swing low is broken at 69. (The swing low is broken twice, but only for a few seconds). A short would probably be justified had sellers held price below 69, with an initial target of 60, but this never materialised, so you can either stick to the plan, stay in the long and risk getting stopped out at breakeven, or buy the new high post the hinge breakout and retrace at 74. The rest of the chart shows the reasons for staying in the long, rather than taking trades counter to the trend. The notes taken here should help me form the basis for producing a more detailed plan.
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'no reason for price not to reverse back to 26'
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A trading plan of sorts for today. Given the successful tests of 2626 since Dec 5th, we have our important S established and if we break above 60, then there is a posiiblity of heading back up to 90. I would favour a long if we can break above 60 (preferably with a dl in place post open, or breaking out of a pre-open TR), otherwise shorts are in order around 60+/- where weakness is apparent, either at a DT or if a downtrend / sl has developed post open. Beyond that, no reason for price to reverse back to 26, but watching out for reversal type action at 50 and 40. If 60 is broken to the upside, 75 is the first target, then 88+.
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Given that y is a MP, I would note where it is, but then I would be looking for behaviour to confirm whether this is S/R (likewise at B and C). I would also want to know where price is on longer timeframe and make a decision that complements that. (I cant find a chart for this market). Examples would be to take a long on the short term time frame if we are at the bottom of a longer term TR, or in an uptrend, or beaking out of a TR. The main action I look for includes a db, a h&s type pattern, a congestion (pace slowing) followed by a bounce, an sl break (in the case of y being tested from above) followed by a HL. Even then, if the opening is a trend of weakness, then I would probably want more than just one of these behaviours to be apparent.
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The gap up from 49 to 70 an hour before the open created the potential for a quick reversal should pre open S (64) fail to hold, (given the lack of support that price created on the way up) and the cue for entry was given by the LH following the initial breach of 64. A scenario that perhaps warrants its own strategy.
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An interesting development pre open as price has gapped out of the downward channel that has been created since the start of the week. 78 now comes into focus as R, wheras S could be found at 61/56/52 before the level at 47 where more trades have taken place.
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From TIF thread: "The reaction to the downmove from Dec 3rd has stalled at halfway (2678), which is also the MP of the TR that started on Nov 29th.The PD provided S at 50/4 and the hinge at 61. The reaction from Nov 19 may be coming to an end and a brk below 50 could be important." (I should add that I saw 54 as more important S as more trades were taken there). Given the above context, it was difficult to look beyond the previous weakness continuing at the open, even though we had a DB at 58 at 9:42, it was immediately followed by a failure to test the previous high, so a break below the opening S level was a confirmation of continued weakness. (There was a retrace around 55 if one wanted to take the break below 58 as a short). 50 briefly held, but the drop in price following the contraction in the price range was not a good sign, and represented another short op. This level came into play again when following a db at 42, buyers failed to break back above it. (Note the PA referred to on the chart when price got back here) I had no real levels of S to focus on sub 50, but taking a long at the db at 42 could be justified as current day S. Again, a market breadth indicator would be useful here, and the obstacle levels fairly obvious. Given the lack of S below 50, these are the scenarios where I want to be trying to catch the longer moves. How the trader chooses to ride the wave down to 23 is up to them, but is covered in detail elsewhere.
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The reaction to the downmove from Dec 3rd has stalled at halfway (2678), which is also the MP of the TR that started on Nov 29th.The PD provided S at 50/4 and the hinge at 61. The reaction from Nov 19 may be coming to an end and a brk below 50 could be important. NDX 04.12.12.pdf
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Areas of interest this morning include the trend channel from Nov 15 which is under threat. A test of pre mkt S at 63 may be important. The MP of the TR at 78 may also come into play. Above that 98 is the PDH.
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The TR from Nov 29 gave S/R at 2668/88. Pre mkt provided a pivot point at 92, and 2700 the round number in sight post open. Price had left the 68/88 TR a few hours before the open, which allowed a trend channel to be drawn to track the strength of the upmove. Chart 2 - Price forms DT post open, 2pts below 2700. Buyers and sellers draw lines in the sand at 98 and 96. Chart 3 - 96 is breached and we have 2nd indication of weakness following the DT. 92 is then tested and holds, buyers form a DB and then a hinge, which buyers break to the upside. Price struggles to hold the new highs and suddenly gaps from 94 to 91, possiby due to the ISM manufacturing news. Chart 4 - Buyers struggle to make headway post the open, with prolonged upwaves followed by sudden deeper downwaves. The best opportunity to join in the weakness comes post the DT at 95 which is followed by a LH.
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The areas of strength and weakness are starting to become more apparent in RT, but still some way to go before I'm confident in each scenario (the first 2 blue dots after the open in particular). The changes in pace were quite obvious, but buyers still couldnt make it above 88 and that perhaps made the stall even more telling. The toughest area was the congestion after the climactic selling wave. We had a poke above that failed and a rapid fall back to 76, then a BO, a PB and another rapid rejection. One thing to consider is where this happened, the MP of the trading range from the open level / pre open low.
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A good day to look at different tactics and what questions these lead to. The first chart reflects the opening and break out to the downside. The pullback was more obvious in RT and provided an entry op. The downmove soon runs into trouble, one could exit at the rejection of the LL at 20, given that the sl was broken. Note the HL's, followed by a LL, although subtle, this is the first retrace. A succession of HH's then follow, then LL's, and to me, one should be prepared to short the breakout of the congestion, or go long should the swing high at 25 be broken, given that this takes place at S/R. Seeing as buyers failed to test the opening trading range, further weakness should not be a surprise. A new sl is drawn, once price pauses and then makes a LL. This new sl is broken at 14, so sellers are looking for a higher low, given that no obvious S/R is in sight, but sellers get a warning at 10:11, when price fails to fall. The question the trader has to ask here is whether a brk of the immediate sl, followed by a HL, followed by a break above the LSH enough reason to enter long, even if it doesnt take place at S/R... The tickq may be useful here. Either way price pauses at 10:16, (at the swing low level at 20), and the breakout comes to the upside, further confirmation should one need it of buying strength. Buyers then hit 30, make a LH, but then fail to follow through (also note that the downmove fails at the top of the opening trading range). Not on the chart is a double top and a congestion, another attempt to head down that fails to make a LH, let alone break that LSL.
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Levels of pot'l S/R as per the chart, but also paying attention to 2625, the MP of the upmove from the 23/11, failure to hold above represents weakness.
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The opening 15 mins was represented by choppy movements in both directions, so focusing on the breakout from the established range brought an opportunity at 09:45. 09:45 Buyers take price back into the overnight range and the rapid expansion is followed by a contraction in volatility. Although this pullback is greater than a point, pace quickens and it is buyers taking price higher, creating the HL. (A buying op). 09:50-09:53 55 is the first level of R, the demand line is broken and we get failure to test the high at 09:53. 09:54 The next bar opens lower and we have a LH, confirming the weakness. 09:52 Waiting for the first retrace allows one to stay short had they taken it, even though buyers reach 52 from 49. 10:02= 10:04 Further weakness as the retrace becomes a LSH, and then a break below the opening low. 10:10 The first warning to the shorts comes when a succession of higher lows breaks the immediate supply line, but buyers fail to break the opening low. The question to ask here is what tactics the trader adopts. An option is that since the opening low is broken , is to lighten the position at the break of the SL, rather than exiting entirely at the first sign of trouble. Holding onto a short may only have yielded only another couple of points in this instance, but would lead to greater profit should the weakness have continued. Further potential for reversal is evidenced by the weakening downward momentum and a db at 10:52 The HL at 10:34 (a buying op) is followed by failure at 2642, but then we have 2 notable congestions at which stop dead at 37 (current day S). A rise above either of these congestions would represent another buying opp.
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A couple of trading ranges to focus on pre-mkt, the extreme of which is at 55. Further R at 60/61 from longer term TR. S at 2642,39, 31
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Price opened above the main pre-mkt TR but having failed to make a new high at the open, dropped back into the range and found demand at the MP (2627). The rejection of the MP was swift and these 2 factors (test + pace) combine to indicate that demand was the dominant force. The breakout into the new high was followed by a pullback of just less than a pt and the trader needs to decide if this risk is worth taking. In this instance, demand was able to follow through. The importance of the longer term context should be in focus here as 2630 – 2692 was the TR that began at the end of October. Buyers are likely to have difficulty above 30 until we have a test of the MP (61), after which the direction of the market may become clearer. 39 presented the first obstacle for the buyers. A lh followed the break of the dl but given this was not an obvious S/R level , it should be viewed as a pause after a 12 pt upmove. The subsequent action then is more significant as the test of the high is quickly rejected. A brief attempt at a LL is followed by a consolidation and it is after this that the buyers give up. 2 LH’s follow, allowing 2 opps for entry. The sl holds until S at 31 (also the opening level) where a HL is followed by a brk of the sl, giving the market a directionless appearance. Given we are at S, a long is justified. The move up post 34 forms a springboard, but this leads to another at 36 and should pose the question whether the short is worth re-entering once the dl is broken. Sellers now congest at 31 (rather than bounce away and create a hl as previous) and the break below gives another short opp which takes price down to 27 (the pre mkt TR MP / and opening low), a springboard forms and another short opp that reverses at 24 (the pre-mkt TR low). To make the session profitable, tactics would be required for break-outs of trading ranges, congestion areas /springboards and what to do at S/R.
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Support somewhat easier than R to identify this morning. The downtrend was broken on Friday, albeit on light volume due to the holiday. The uptrend has since passed the mid point of the downtrend (2588) and 2630/1 looks important for the open. S at 2623, 05 / 00 & 2595 R at 2630/31 Above that, price could halt pretty much anywhere all the way to 93 NDX 23.11.12.pdf
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From the 07 Nov to 15 Nov , a new supply line could be drawn to track the increasing pace of downward momentum. Given that the trend channel had been broken, it was possible to view this as an oversold condition i.e, a fall so sharp that a correction would likely follow. The beginning of the correction occured on the 16.11.12, where it is notable that buyers were able to create a HH on large volume, and in conjunction with support established in July. Crucially though,price is still below the new sl, so we await to see if there is any follow through. 21.11.12 Price has rebounded sharply from the lows and we have more evidence to support the theory that a selling climax has taken place, and that selling pressure is weakening (failure to create LL's + falling volume). We are still of course in the downward trend channel so there is no reason for those who are short to exit, but should a higher low and break of trend channel be created, be aware that that would represent buying pressure overcoming supply. NQ 16.11.12.pdf NQ 20.11.12.pdf