Monday 3-7-11

outlook from evening discussion:  If we do not see 1316 hold, the market should continue for a test of the 1311-12 area.


Although the London segment trended up, the expectation for the US open was a  down bias until the market proved us wrong.  That proof never materialized.

 From the start, we had an early MAXT (moving average exhausted trap) at b8 on the 8m chart, and b20-21 on the 3m chart.  I like using two charts for confirmation and as a tool to attempt better entry points.

The entry is based on the bar exhausting a continuation trend at the ma, which acts as a local support/resistance.  The b20 entry on the 3m chart is 1222 which hits on b21.  We then look for a reason to exit, and in this case, it was the next two signs of buying interest.  Buy/sell interest can reverse a market, or merely give you a place to find  interest in your contracts.

The second opportunity was found in another MAXT on the 3m chart at b55-56.  The PA would not break the ema, and the entry was at 1310.  Exits, again, could be found at the buy levels marked with green arrows.  We will discuss these buy/sell area in a future blog.

The final trade of the day was an XRB (exhausted reversal bar).  An XRB is similar in concept to the MAXT.  Note PA seem to exhaust on the 8m b46-47 at 89 ma level,  and is confirmed in the 3m chart.  The short entry is 1312.5.  This is an EOD trade and would be for a single exit at 1309.

A final note, some general rules.   1.  use two chart to confirm a trade;  2)  exit when opposite strength (opposite side of your trade) is noted;  3)  preference is for fib charts:  3-5-8-13-21  etc.