THE BREAK OUT RUN 4/10/14

LAST evening there was a sell off in the US markets then price found a flat range to tread water,  This sell , and the only news was from China, was interesting.

Forward to the open, price ids in an extremely tight range.  Albeit the chart narrows when a huge run occurs, the range was  around 5 points.  A 50CB developed on bar 1 and we had a 2 bar doji by bars 3 and 4. 

• Top not breaking
• 50CB  early test 
• 2 bar doji (read reversal)
• This market is in trouble!

Price broke lower (BO=Break Out) and we see a supporting gap until the BO-15 level.  The gap helps gauge the strength of the run.

A narrow pull back was stopped at a BO Level and was a relatively lower risk new short entry.  A nice 20 point break out day.

BULL CONTINUES IN A RANGE RUN 4/9/14

Price was in a narrow range  in pre open and was stalling after a nice extended two bar bull push.  A two leg sell off opened the market but found support just above a target level.

The B10 50CB conquered the failed bull pushes seen in bars 6 to 9. A plus 5 run retraced back to the 50CB and held setting up a higher low and the expansion run to the upper range target.  The gaps  added confidence to the bull run and used to select exits, and additional entries.

Another 50CB developed near the +10 run in price.

SELL AND SAIL 4/8/14

We started the day with a sell off inside the lower range for the day.  A channel was developing with a mid line off the bar 1 50CB.  I will draw the top for bears (bottom for bulls) then copy a parallel line for the opposite side.  The mid, if used, will come off a 50CB or other target.

Price was a FBO at the lower range and quickly retraced the B12 50CB and tested the B11 CB.  Price was positive to the 50CB trend line and at the top of the bear channel.  At these points we will always consider the possibility that the trend can stall, and in this case, return to selling.

[10:41] <CM> us mkts top of bear channel will look for additional selling

By bar 17 we were hitting the b3 50CB and likely pull back in price.  Both B17 and 18 closed off their highs at the 1840 area.

[10:54] <CM> 16182  3519.75  1135.3  1840

These targets were the pull back levels to watch for shorting.  The issue:  we have a strong bull developing due to the gap to the 20ENA and the gap above the 50CB TL.  The 1840 would not be considered until later in the afternoon, albeit price was stopped by a higher 50CB.

the next set:

[11:06] <CM> 16202  3527.5  1139.8  1843

[11:11] <CM> pa pushed higher  now see if it will return to the pb pt  we have 50cb's below and a prior pbs for a target

The high was set and price traded in the upper range with test of the lower 50CB at 1842.

ANOTHER SELL OFF DAY 4/7/14

The ES today had a major 50CB development early in the market.  Price broke for the bear and remained trapped below the 20EMA

New 50CB's developed and a bear channel indicating a weakening of the sell off.  This channel push slightly lower than the range finally finding the buyers to push the market higher.

FOLLOW THE CHAT:

[10:47] <CM> ES 57.5-10=47.5  10 point range in 
[10:48] <CM> 48 is bo point for sellers..
[10:49] <CM> or those that shorted b13 low..
[10:53] <CM> ES target 45

[11:10] <CM> sell bias ema hold 5m  gap on 15m

[11:21] <CM> ES consolidating=move coming
[11:53] <CM> ES target hit covered all shorts +** total

[12:57] <CM> buyers ES 42.5 targets 43.5 44.75 45
[13:13] <CM> ym tf nq es buyers

[13:17] <CM> bar 44 on 5m chart a 50cb to test on all majors
[13:22] <CM> stc ym nq tf 50cb test completed

[13:35] <CM> ym es tq nq at low of 30 minute range

[14:53] <CM> stc all  (trades shot deleted)

[14:57] <CM> done have a great day..

HOW TO FIND ( AND STAY) WITH THE TREND 4/4/14

A Forrest has been cut down to create all the paper used to publish trading books.  Read until your old, but sooner or later you must begin to trade  and shift your "reading" to the charts.

The easiest, and perhaps the lowest risk, trade may well be the With Trend Trade.  A review of some key signals can help you put our trades to work;  working for you and not against you.

• Price relationship to a moving average
• Price relative to recent highs/low
• Price to +8 to +10 targets
• Price failure to break, or price breaking 50% area of a control bar (50CB)

OK, enough for now.  No need to get too complicated.  Use these parameters and read the chart and make your own judgement.

[10:26] <CM> US Mkts looking to test lower support potential new LOD
[10:35] <CM> low test in nq  which has been a drag on the mkt
[10:38] <CM> mkt shorts entering NQ is the anchor dragging
[10:39] <CM> im short bias until the two lh's break     (LOWER HIGHS)
[11:10] <CM> someone opened the drain...

Each long attempted was a counter trend trade, failing to close the EMA gap and failing to break 50CB levels.

LONG WITH BUYERS, SHORT WITH SELLERS 4/1/14

One of the hardest trades is changing your trade comfort to match the market. The market is going up, longs with trend are easier than the counter trend short.  The trades are reversed with a declining market.

Your comfort trade becomes taking longs, or shorts, then the market flips.  Your trying one trade and finding it difficult to garner the wins or points your accustomed too.  This is one reason traders find it difficult to trade.  It is also a reason to work diligently on market reading and develop a trading system that will have a high probability to work for your style, and one that will attempt to reduce risk.

Trades in the market today centered around two forces: the range for price, and the BULL-BEAR trend lines.  We had a break out of the pre-open narrow range, followed by a broader two leg run into resistance.  Leg 1 was bar 1 on the 5 minute chart and b3 began leg 2.  Sellers were interested as we got to b5 and 6.  This is where your read abilities come into play.  Sellers are interested but your fell should be:

• sellers (buyers) will enter in stages at a given resistance level or support.  It is easy to see the sellers at b9 or 16 and it is easy to see sellers at b8/9 high of the day after price runs to the buyer support line.
• IT IS DIFFICULT TO SEE THE SELLERS/BUYERS AS THE BAR IS FORMING
• Solution:  you must be willing to trust your read and play that read.  Shorts were entered in that sell range.  The optimal hold would be until price hits the Bear TL or the buy support line.  In real time, the covers were taken at the EMA and dictated by distractions and price action in other markets.
• For longs, plan trades at/above the buy line.  Stronger were trades that were + to the buy line, Bull TL and Bear TL.

If you are having trouble flipping between trades-long to short or short to long- then learn to trust your reads and wait to play the trade(s) that seem to have an advantage and assumed lower risk.