YM, ES and DJIA Analysis

[james_gsx 16]

I guess I should have better explained the range bound stuff that screws me up.

 

For example here we are stuck between 2-3 ES points. Granted there is money to be made and I should have shortened my time frame to see better setups. I just find I get chopped up in these situations. But I definitely argue that in a trend day and you go the wrong way you're out.

 

[james_gsx 16]

Looking at the dow I still see resistance at the 50 SMA. I would be cautious of going long now even after todays candle just because of the last 3 times we closed around the 50 SMA the next day produced large down days. I guess I'm just not experienced enough to trade this kind of market just yet.

 

I really think seeing a weekly close will clear up a lot of things.

[brownsfan019 17]

James,

I see what you are saying.

 

Here's my take on your chart:

 

 

 

I assume your lines are pivot or some support levels. Working off those assumptions, here's what I see:

1) Nice spinning top as you annotated.

2) Hammer that failed.

3) Engulfing that worked well.

4) Hammer with small profit.

5) Spinning top.

6) Engulfing.

7) Shooting star.

 

Now here's what I also see about exits - if you wait for a reversal, trade #1 and #3 provide some very nice profits. Trades #2, #5, #6, #7 while all are losses, they appear to be small, esp compared to the winners on #1 and #3. Trade #4 was a scratch for sake of discussion.

 

As you can see, you could literally go 2 for 7 (28.5% win rate) and make money.

 

If that doesn't get your attention, I don't know what will.

 

That's the power of candles - they are very good at calling the major moves, it's simply a matter of being in the trade. There are plenty of trades that don't go as planned, but that's irrelevant if you can psychologically handle it. In other words, looking at today's trades for your chart, there was about 15-20 pts in profit on the trades that worked. The 'losers' were small, but even at 2 pts each, that's -8. End result was at least +7 pts assuming worse case scenarios and fills. I don't know about you, but a +7 day will work for me with 7 trades. Not too shabby in my opinion.

 

PS

Did you get my email?

[james_gsx 16]

Here's a follow up observation - there's many theories out there of how to trade rollover day. But take a look at today - major bullish action. Why? Well, one idea could be that anyone long (like our trade here in the YM and ES) is that all the people that were long and needed to get long again, just bid this thing right up.

 

It would be interesting to go back and research rollover days. There's only 4 per year, so the research could be pretty easy if you have the back data. I would just like to see what each of the rollover days looks like.

 

The other side to todays action could be all of the shorts needing to cover - then possibly go short again. I think that would be an assumption from the CFTC report dogpile posted. But again, I'm not sure.

[james_gsx 16]

Yeah I got the e-mail, sorry I haven't responded yet I was actually planning on doing that tonight lol

 

Now for all of those candles you pointed out, where would you have entered the trade? The close, the close of the confirmation? I can see an engulfing candle can cause a lot of emotion if you're not in the trade, meaning you'd want to jump in just to have it retrace and turn it into a hammer. But then theres the engulfing candles that immediately retrace the next candle. I guess that's just the risk you take?

[brownsfan019 17]

Yeah I got the e-mail, sorry I haven't responded yet I was actually planning on doing that tonight lol

 

Now for all of those candles you pointed out, where would you have entered the trade? The close, the close of the confirmation? I can see an engulfing candle can cause a lot of emotion if you're not in the trade, meaning you'd want to jump in just to have it retrace and turn it into a hammer. But then theres the engulfing candles that immediately retrace the next candle. I guess that's just the risk you take?

 

You got it - it's all about how much risk you want to take and how aggressive you want to be. At the very least, I would wait for the current candle to close. You can then enter a market order based on that. Personally, I would like to see confirmation on the next candle - so the entry may be 'worse' than a market order, but I think you'll see plenty of times where this will 'save' you from a loser.

[james_gsx 16]

Again, not a whole lot of action going on. We are trading in a range and theres a lot of action around the mean. Looks like there could be a spinning top on the YM. So what does that tell us? We might see the market drop a few hundred points then pop back up. Should see some confirmation this week as to where the market will head- I hope :crap:

 

 

Again though, if you can trade another commodity market right now then I would and wait for a better setup to occur here. I just don't see a lot happening for swing trades.

[james_gsx 16]

So far going into tomorrows FOMC meeting I still see a ton of disagreement between the bulls and the bears. On the ES and NQ we had a doji Friday followed by some confirmation today. But I'm really not sure if I'm missing something, maybe Brownsfan or someone else can point out something I may be missing?

 

The weekly charts look noisy too.

[brownsfan019 17]

#1 is our long we already discussed. Long at approx 13,220.

 

#2 is a little tricky due to rollover today. So the chart is deceiving - it looks like there was a giant gap up and that's not the case. It's late, so if my math is wrong here, forgive me. Based on exiting our trade this morning due to rollover, here is what I see:

Initial Entry of 13,220 on the U7 contract.

We exit the U7 long this morning @ 9:30am EST @ 13,390.

Profit from long = 170 pts = $850/contract (in trade 3 days).

We then go over to the Z7 contract @ 9:30am and go long @ 13,490 if we want to maintain the long position into the new contract.

 

Well, James... let's see how are trade is developing here...

 

 

 

I'd say our long is in a comfortable profit position, thanks to our Fed.

 

At rollover, we went long @ 13,490 on the Z7 (after the 170 pt profit on the U7) and current price is approx 13,835 (+345 pts).

 

So now the question is HOW to manage this trade.

 

Here's what I see:

 

> We are at a possible resistance zone. I would sell some of the original 13,490 position here based on the WRB that closed at a resistance level. A retracement is likely this week.

 

> If we can stay above this level, the next resistance area looks to be at 14,000 - 14,100.

 

Hypothetically, if we dumped our entire long at the close today, we would have netted 515 pts (170 + 345) on this ONE simple, candlestick trade.

 

And for any doubters, most of my analysis here was done in REAL TIME that could have been traded on if you wanted. I'm not suggesting you blindly trade ANYTHING I write here, but I hope you see the power of looking at a daily, drawing your s/r levels based on candle 'clusters' and then look for a reason to trade. That's it.

 

Also, did you notice how that 50 SMA was once resistance and then became support? What a classic, simple TA trade - old support becomes new resistance and vice versa... :hmmmm:

 

Is it really this simple?

 

You decide.

 

Good trading.

[brownsfan019 17]

And the ES chart...

 

 

 

Another nice trade here as well. I'll have to check the #'s out on this later. All I know is that a giant GREEN candle is great when you are LONG.

 

[james_gsx 16]

Hey guys, heres my version of the current YM situation

 

We did have a long signal to buy a few days ago that has yielded great results if you took the trade :crap:

 

One thing I would like to bring to mind is our close at resistance. I am looking for a close above this level so I can bring a bullish attitude into next week. Overall I believe the market will continue to head lower, but I will go with the flow and do what the chart tells me to do.

 

Brownsfan I have a few questions for you. The Euro, USD, and YM all posted similar patterns before today. I have seen these patterns in books before but I forget their name and what they resemble and the psychology behind it. I will post the USD and Euro charts in here as well as start a new currency thread since I think that will be very important factor heading into the end of the year.

[Vercingetorix 10]

I think we're going to get another wave down to shake any early longs out and suck some new shorts in. The weak volume rally is what is telling me that this recent move up is not the real thing. We'll form either a head and shoulders or double bottom and then rally to new highs. I'm of the persuasion that this is a correction and not the start of a bear market. The reason is simply the amount pessimism is too great for this to be a bear market. Bear markets don't happen when everyone expects one. Also the price action during this correction looks bullish from a vsa perspective so I would say that the pros are buying this correction like they did the last one in march.

 

Not to blow smoke up my own arse here, but once again vsa proves of great use.

[james_gsx 16]

Vercingetorix, how did you use VSA to come to the conclusion this whole thing looks bullish? I really don't know a lot about VSA so maybe I should go look into it.

[brownsfan019 17]

verc - thanks for sharing! I'm sure James will take a look into it further if he has not already. As for me, I am content with my candles as they appear to do well, esp on the daily as evidenced in this thread in real-time.

 

:thumbs up:

[james_gsx 16]

Everything still looks bullish short term. I would be slightly concerned about a possible spinning top on the YM but I wouldn't exit our trade yet. I would on the other hand move up my stop and go running around the neighborhood naked with our near 700+ pt trade. (why the hell am I day trading if we could do this??)

 

We hit some resistance today, but I think that's perfectly normal and I wouldn't be too surprised to see some profit taking the next two days. I will just have to wait and see what candles are produced and what the weekly chart ends up looking like.

 

Brownsfan, if what I'm seeing on the ES isn't a possible inverted hammer, then let me know what it's called :o

[brownsfan019 17]

Here's my take on the YM:

 

 

 

What I see is that our initial long is still rockin and rollin, so that's good.

 

We now have an inverted hammer / shooting star, aka bearish type candle, near a possible support/old resistance zone. This is a tad concerning. The options at this point are:

1) Exit our long at the market tomorrow.

2) Exit our long IF this bearish candle confirms.

3) Exit our long AND initiate a short position IF the candle confirms.

 

For the candle to 'confirm', I would be looking for price to go below the low of today's candle, which is approx 13,830. Therefore, a sell stop could be placed at 13,829 or lower to either close the long trade or close the long trade and go short.

 

Based on the candles, I would consider that short; HOWEVER, there is a possible support zone around 13,750. So this could be a quick pop type trade - if the short fills, I would watch closely to see if that level could be broken. If that 13,750 level can break, I would feel good about the short.

[brownsfan019 17]

Today was an interesting day. I was curious to see if that YM short filled.

 

If you traded during the day, you know it moved up a little and then down. It moved a little heavier down towards the end of the day, so I was curious to see if our resting sell stop would have been triggered.

 

Here's the chart:

 

 

I posted the closing numbers on today's trading to verify that our resting sell stop was not filled today. The low of today was 837 and our sell stop is 829 - 8 pts away. So based on our chart, #1 long is still working in some capacity - whether it's a full boat of contracts or a trimmed down amount.

 

Based on today's numbers, we could take a short based on the red spinning top type candle with a sell stop @ 836 or lower, so our sell stop level has been raised based on today's candle. You could also leave the sell stop based on the other order as well, which would be a more conservative play. Again, keep in mind that there's a support level highlighted in yellow on the chart. The conservative play would be to wait for that level to be broken before taking a short. I like a little risk, so I'm ok with this current possible short knowing that it could stop out or provide a small gain (in context of some of our others here). If we get filled short, I would just be looking to see a close below that level to feel better about the trade.

 

What I'll be watching to see is how much action takes place when that low is taken out. We are taking a short based on candle patterns. Others may simply place a sell stop based on the low of the candle. That's fine with us b/c the more momentum, the better.

 

Here's an example of taking a trade knowing that there is s/r level close by and you watch to see how it develops:

 

 

 

So what we have here is two possible reasons to go long at #1 and #2. Hopefully it's easy to see the nice setups there - a hammer at each, both at the 50 SMA. Now, when taking these longs though, you have to see some possible resistance just above (yellow line). As you can see, when that level was to be tested, it just busted through and said see ya. That's what I would be watching on this possible short - we know there's a possible support level close by that could cause us to go long again rather quickly, but we'll take that short and be conscious of this level.

[james_gsx 16]

I wish I was home right now to post charts. But it looks like a H&S pattern could be forming on the YM. I would definitely wait until next week though before trying to go short in this market.

[brownsfan019 17]

We'll see how today goes James. Thus far in pre-market the YM is up, so no fill on our short (yet). There's not much on tap today for econ news and it's quadruple witching, so we'll see how the futures react today.

[james_gsx 16]

Tomorrow we have Consumer Confidence and Existing Home Sales data coming out at 10 am ET. As far as the charts go, I think the time to go short may be now. We have an inverted hammer on the YM and consolidation around resistance which is bearish to me. I still think we can get at least a 50% retracement of the big real body created when the Feds cut rates.

 

Same goes with the ES. But There is a doji with highs at resistance, we are also seeing lower lows, which is bearish too.

[brownsfan019 17]

James,

Good charts.

 

I'm thinking of just taking a break from posting updates and providing all this work when it's just you and I discussing. I'll be around and keep the CC alive, but when it's one or two people talking alone on a forum, it gets old real quick. There's obviously not that much interest and I have no desire to put together charts with annotations and then document that here when very few are going to take a look.

 

I was actually thinking of starting my own little trading blog, so maybe I'll just do that. I can post my thoughts and charts and not be concerned about who is interested on a forum. I enjoy talking candles and trading here, but there's just little interest at this point and I hate feeling like I am wasting time when I've got a lot going on right now and time is precious.

[wrbtrader 10]

James,

Good charts.

 

I'm thinking of just taking a break from posting updates and providing all this work when it's just you and I discussing. I'll be around and keep the CC alive, but when it's one or two people talking alone on a forum, it gets old real quick. There's obviously not that much interest and I have no desire to put together charts with annotations and then document that here when very few are going to take a look.

 

I was actually thinking of starting my own little trading blog, so maybe I'll just do that. I can post my thoughts and charts and not be concerned about who is interested on a forum. I enjoy talking candles and trading here, but there's just little interest at this point and I hate feeling like I am wasting time when I've got a lot going on right now and time is precious.

 

I had a Japanese Candlestick pattern analysis blog once.

 

I use to post daily charts, analysis, broker statments and an occassional video of an actual trade of a candlestick pattern (you could see my chart and broker platform in the video from entry to exit).

 

Very little interest I got except for an occasional message that Japanese Candlesticks don't work even though I was very profitable (except for a few trading days) along with showing verification of the profits.

 

My point, if your going to start a blog...don't do it for others nor for educational purpose.

 

Instead, do it for yourself regardless if you only get 1 visitor per week or 100,000 visitors per day and you just may be able to endure much longer than most in maintaining a trading blog.

 

Simply, if you do it for others...that's when potential problems begin.

 

Last of all, its a lot of work maintaing a blog (I lasted only 4 months in doing a blog).

[brownsfan019 17]

Thanks for the advice Mark, I appreciate it.

[ptop 10]

James and Brown it is too bad you felt the need to stop posting, I was gaining allot of insight as to candle formations, never really followed them for swing trades. I hope you reconsider start it up again. This has been a great thread and am sure others would agree.

 

Cheers

[brownsfan019 17]

James and Brown it is too bad you felt the need to stop posting, I was gaining allot of insight as to candle formations, never really followed them for swing trades. I hope you reconsider start it up again. This has been a great thread and am sure others would agree.

 

Cheers

 

Thanks for the comments ptop.

 

It's a lot of work doing EOD analysis with annotations, highlights, etc and it just felt like James and I were having a discussion with ourselves.

 

I guess I'm more open where there's healthy dialog going on with a few members.