SOME OF THE MISSING PIECES

TODAY:  ES & 6E

Brief chart discussion this evening, so a trading rules section can be developed.  This is part of the missing pieces, as  the blog continues to develop the trading fundamentals.

click to enlarge

The early, pre-open BOTS were determined and posted in various chat room, including our own.  Just prior to the open, price failed at the EMA (a MAXT).  The short was acceptable:  MAXT, lower short BOT.  By bar1, the short had failed (FBO) and the longs ran to the upper range target.  We see a bullish TL develop, and new longs were entered at b10-11.  By mid day, a new range developed.  The second test of the short BOT was a reasonable short:  at BOT, below the EMA, second challenge.  It worked out as a scratch. As stated in the rooms, one failed, one (next) sailed!

Out for the day, but the reversal back to the long BOT ( and EMA by the way) was a sound decision to short.

Same story.  Set the BOT range and wait.  The double bottom  just below the short BOT was noted.  Both ES and 6E were long bias today.  Not drawn, but you should visually see the bull TL from the double low.


SOME RULES:

1. The BOT's establish a trading range, and will direct our attention toward the market direction for the day.
2. The long/short BOT is the entry.  Price structure before, or  a BOT located near/at the EMA will give more confident to the trade.  As a trade, consider each aggressive on the first attempt.
3. When price exceeds a BOT and reverses, it can be labeled as a FBO. (failed break out).
4. Price from a FBO should be watched for a new trade contra to the BOT when it reverses through the BOT.
5. When in a trade:  stops will generally be 5t.  If the entry is at/near the EMA, consider a 5t failure from the EMA.  Example:  When the short did not run today at 1317, price moved to  where bulls were waiting to enter.  Generally, not good for the short.  However, we were near the EMA, and a 5t failure for early bulls was expected.  It happened, and allowed for an exit to the trade without damage.
6. When in a trade: profit will be +1 partial, and breakeven.  If one contract (C), then the target is +2, with a stop moved to +1.  For all cases,  one purpose for the BOT's: we assume a trend will develop after the break.   Once price is +2 from your entry,  consider adjusting your stop into profit and follow the TL.  Generally, this is approximately 50% of  a control bar, or 1-2 bars behind the price.  A control bar is one of significance.  The 9:10 AM  6E bar or b13 at 10:30 would be examples.  The 6E targets are +5 or +10, then follow the trend.