You can read charts and be right about your interpretation of likely price action (PA). The issue: how long will the target take to develop much less hit. Today we had a buy at the 5m EMA just prior to the open and near the LB.
The LB (or the SB for shorting) is expected to run for a minimum of 5 points. Less is a different play. The long did hit the BO 5 but took until B18-19. When it hit, 18-19 developed as a 50CB at the BO 5 level. With a FBO at the BO 5, PA is expected to return to the LB.
Wait, wait, ....
to around B62-63 for a 2bar reversal at LB plus 2 ticks, and a run back to test the BO 5.
From B1, PA played in the middle of the range almost all day at the 1417.5 level. In the after hours, we finally hit the LB at B119.
hi CM,
ReplyDeletegreat post.
One question: when you see the FBO at the BO5, where is the right short entry and where the Stop loss?
In this example, the first clue was the PA stop at 1421 on bars 18 & 19, which also formed a 2b Doji, a reversal pattern, and is at a key level (stronger support to take trade). Another point: b18-19 also makes a 50CB around 1420.25. Net effect, numerous set ups at a key level screaming SHORT. In this case, short the 50CB as a minimum and your risk is one tick above b18/19, or one point.
ReplyDeleteHindsight, but if you did not play b18/19, then the FBO at b35 was another entry point and we had prior bars stall at 1420.50. Since the BO 5 was deemed a FBO, we tend to expect a PB to the LB. To time your entry try a tick chart or a 1m to see the FBO quicker. Many traders will use a set up chart, switch to a timing chart to get a better entry price, then go back to the set up chart for the exit. Join us on Mirc at #Chartmaster and watch for the live charts in the webinar.