Breakout Trade Strategies on ES

[Eric Johnson 10]

Well since I began to explain, I might as well continue. My EMA colors used are aqua 14, pink 50, dark blue 250. I was looking at the hour chart and noticing that the yellow and blue boxes appear very similar in an inverse fashion. Although I do not trade hourly bars, it makes my point blurry without further clarification (or a bigger contextual chart to view). The blue box responded to a 50% major trend fibonacci retracement, and broke upward.

The idea of early or late in the trend is more clearly seen on the 5 minute chart, with the price high late in the trend.

On my 5 minute chart I use daily pivots. On the hourly, weekly pivots. I also use a series of EMA envelopes. The one simple thing that I will share is that I have devised a measurement of how far price crosses above or below the 50 EMA before a trend is out of momentum, and will then trade sideways or reverse. So for a made up example: for an up trend on the 5 minute bars, if the price goes 4 points below the 50ema , I consider the up trend to have lost momentum. This means that a channel can develop and last for numerous oscillations, if it follows an lengthy trend.

So to avoid getting off topic, let's say that there are other factors that I use to see strong support and resistance levels. I consider these also for direction of breakout, but am not going into them for brevity sake. The simple idea of the probability of the channel break in the direction of the hourly and triggered on the 5 minute is what I offer for now. Combined with the thought of using forex market opening and closings for timing triggers.

Not easy to cram and limit in a few paragraphs what is a extensive system.

Like I said, breakout's are not my favorite thing to play, they come down to probability and avoiding fakeouts. My system is really about the average range of a breakout hitting strong support/ resistance and fading the stretched range.

Edited October 25, 2009 by Eric Johnson

[86834 10]

If you want to trade break outs, then you should be looking at the bigger time frames such as daily, monthly and weekly for key s/r levels and over all direction in the market. For example, last week in ES has been a great trading week as the market has been repeatedly trying to test resistance on the daily chart and consolidating, and on the weekly time frame we're approaching key resistance. I've attached a couple of charts....

 

Remember that 'day trading' simply means that you close out your positions at the end of the day. It doesn't mean that you're restricted to use small time frames like the 5min chart, which isn't really going to tell you that much in the grand scheme of things. You need to know what the market is doing, and looking at the large time frames will help you identify this so that during a trading session, you can position yourself to take advantage of the big runs and breakouts during the day. There's no point taking a breakout to the upside on a 5min chart when there's key weekly resistance 2points above you.... trade smart....

 

 

boost

[86834 10]

forgot to attach screenshots

[Eric Johnson 10]

Yes I agree with your point, a look at the daily is valuable. Most days the day price action is not on a major support resistance level. Also if it is, there is generally consolidation, and the question is when and what direction will it break out. The problem with breakouts is that unless you use wide stops, one needs some real precision to target the breakout action, and avoid the false break.

The one hour does show the price action with about 2 months or more on a single screen of clearer definition. Showing things like formations, averages, exhaustion bars, or rejection levels. Getting down to the 5 minute trigger seems useful, that is when I have seen the market respond. As for the bigger runs you speak of, I catch them with my large envelopes. The ranges are tightly reflected on the hourly.

Actually there is one more EMA I use that is the 600 ema on both charts. It ties me into bigger time frames. The reason that I use the 5 and 60 min is that the ma's correlate. Something like my 200 ma on my 5 minute is similar to my 50 on the hourly. Also the pivots tie me into higher frames.

So everybody has their objectives, and the daily perspective is something I agree with and use. Just trying to simplify and focus on key aspects, that would are a bit unique to what I have been using.

[forrestang 10]

If I'd had known this thread was here, hehe.

 

Here's a slight breakout I traded in ES just now. Conservative target was there. 2nd green would have been better, but oh well.

 

---EDIT----

2ND picture is the resistance area that price broke through.

Edited October 26, 2009 by forrestang

[Gabe2004 10]

If I'd had known this thread was here, hehe.

 

Here's a slight breakout I traded in ES just now. Conservative target was there. 2nd green would have been better, but oh well.

 

---EDIT----

2ND picture is the resistance area that price broke through.

 

Something does not jive between the two charts on the left.

It seems as if the 15 min is missing data.

 

Gabe

[rocky9281 10]

I don't trade the ES. But do you guys think that there is a fixed time for its breakout ?

 

For e.g, SGX nifty always breaks out of its range between 12 am to 1 pm EST.

 

Have you noted anything like that for ES too?

[ckait 10]

i love the term always

[Tams 20]

I don't trade the ES. But do you guys think that there is a fixed time for its breakout ?

 

For e.g, SGX nifty always breaks out of its range between 12 am to 1 pm EST.

 

Have you noted anything like that for ES too?

 

can you show me a few charts of this SGX break out phenomenon?

[rocky9281 10]

can you show me a few charts of this SGX break out phenomenon?

 

Sure. But can I have my answer please?