TRENDS AND BRACKETS

Once again, the pre-open look was of overlapping candles on the 5m ES.  The 512-3m had a better feel, and was the chart of choice for the open and the trading day.


Price was hugging the clustered MA's and then began to weaken.  We chose to act on this PA rather than using a bracket.  The first trade of the day was a short of this weakness, followed by a long when buying was noted.

The long was a reversal entry.  The setup was approximately 50%  of  b4, and it was set above b6.  If  b6 continued down, then there is no entry.  The order entered on b7.  We discussed the logic in the chat:  when shorting draws in new traders, down PA seems obvious, the market will often correct in the opposite direction.  Although the trade was for +1, the actual outlook was for a move to 1304-05.

Price broke the MA's (CMA) and continued in a long bias.

TREND RULE:  When the entry is on a CMA,  the long/short will stay with the trend until 1.) profit target hits; or 2.) PA closes below the EMA.


BRACKET TRADE: DAY 2

Refer to yesterday's blog for the bracket rules.

Brackets were set at 11.25L  and 9.25S for an afternoon trade. If the PA is trending prior to the bracket, a with-trend order can be entered at the first BO, however there is the risk of failure, as with a consolidating BO.  An entry here can have a secondary order at the 50% area if the pullback develops.  In this case, there were interruptions and the trade was scratched.  A secondary entry was used to garner a quick point.

The bracket trading was followed by more long trend bias.  Again, long until the EMA is threatened.  In this case, the EMA of the 512 was used for the exit, to help preserve more of the profit built into the trade.