STAGES OF THE MARKET:
PRE OPEN
Market is oscillating between the MB and the LB in the pre open. If you look around 9 AM EST you will see a clue we are interested in: a push to the LB but two bars fail to hit, two hit but do not cross, and the only bar to cross failed and closed below. Strong resistance screaming short. As discussed in chat today, sometimes the entry is not a bar, but a level. In this case, a short at 34.25 has a low risk with a stop at 35.25 (above the high). The FBO of the LB is expected to run the range, which is PA going from the LB to the SB in this case.
OPEN
B1 completes the range run and closes exactly at the SB. You could short the SB for a potential BO. B2 was the first PB but B3 stalled. Quick thought: we are at support and holding for nth bars. But the real story here is the failure of B2-5 to break the 50CB of B1. This is the smarted short area. We just had a range run down, PA is stalling at a key PB, and the final piece: look at the PA gap to the EMA (and the MB). 1432.50 has a 1 point risk to top of B1 and would be a close above the EMA. The PA is not indicating that move. The SB BO should work. It did, but only to the BO-5 from yesterday (Y-BO5) where it bounced between the SB and the Y-BO5. B12-13 FBO at the EMA/SB was a lower risk short, as well as the 2B (two bar) Doji at B26-27 at the SB.
MID-DAY
With PA holding at the Y-BO5, we mentioned in the chat that 1429.25 was a lower risk long and a add-on was likely around 1431.25.
[11:56] <CM> add limit long ES 1431.25
[12:00] <CM> 1429.25 aggressive es long stop at 1428.5
PA began a bullish rise at B31, and was creating a gap to the Y-BO5 support. News hit and we had a +3 run. B37 sold from the high to remove stops and the pros took over running the range and breaking the LB for a BO5 run.
THE BO 5
PA broke the LB and a BO is expected. If it fails, look for a reversal to the prior level (LB in this case), We see a gap in PA highs and closes, and the BO 5 at 1439.5. The question again, when to enter? The answer given in chat, look for a value to enter. This was 38.25-38.5 and certainly at the 50CB level of B37 (1437.5). More conservative? Then go with B59: a BO below the recent micro trading range, and a break of the EMA. We hit the LB.
THE REVERSAL BACK INTO THE RANGE
WE mentioned in chat that it was a H&S variation developing and would hit B32-34. if you shorted B59, the PB at B63-64 most likely took you out if you did not exit at the MB buyers seen in B61-64. But the gap in B64-65 was another entry short at the FBO of the EMA.
PA continued to the Y-BO5. A clue to the bear (or a bull) strength is the gap on PA to the EMA. The B65 short was a nice hold for 1- the BOT levels and 2) the gap to the EMA.
Great! Thank you!
ReplyDeleteNow (with your comments, analysis and help it will be my turn too also make a profit!
I wonder, what is your hit rate?
HI CM,
ReplyDeleteunfortunately I was not long on b37 and did not realize that the sell off was cleaning stops only to move back up. When I saw it (b37) closing exactly at the SB and after the failure at the SB of b12-13 and b26-27, I did not buy b38 while it was forming.
My question is: assuming you were not already long at b37, which is the logic and entry point to get long during b38? Is the tail of b37 above the SB enough reason to think at a possible range run back to LB?
Many thanks and congratulations again for the trade during the fomc bars...
To your Q, if not in on B37, what is the logic for a B38 entry and where? We had mentioned longs at 29.25 and at 31.25. So the bias was for a long entry. Note that B37 created a significant range compared to prior PA. That makes B37 a clear 50CB. B38 actually opened higher than B37 bar close, was at the SB, and above the EMA. Putting all this together, the entry was: B38 in the body price for B37 (the 50CB) and the 31.25; or at the EMA; or at the SB. Your risk of B38 long failing was the bullish TL from B31 or a little lower at the Y-BO5 support where B37 could not maintain a BO.
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