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123 drive down, took 3 tries to go long. Trading hammer candles, not my favorite, but all you can do is trade the set up and put in a stop loss and take profit. Let the price action do it's thing. Don't try to guess which ones will work out or fail. If price action is still bullish and at supports you have to continue to trade all the set ups. Picking and choosing which ones to trade will often end up in losing more than winning.
Plan the trade and trade the plan.
T1 hit and stop loss raised to break even.
I am going for the home run on my last runner, and see if this can reverse and get back to the 4207 area. Triangle patterns are know for their violent reversals.
My favorite chart pattern set ups. Refer to posts 1919 to 1922
Double ABC pattern at the Demand zone. Link back for original chart.
This is a really strong set up and I use the 1.618 and 2.0 as targets.
This was a chart I posted earlier but forgot to show the double ABC move and it's fib targets.
Then price came back up and retested the supply zone 3 more times, which is where I really start looking for a rejection to go short on a bigger move.
Demand zone stop loss hunting.
This is where a demand zone gets broken below just by a few points and then moves back up above the zone.
You still want to look for a reversal pattern such as the ABC move with a retest and then a break out.
A closer look at the set up that formed the ABC pattern with a retest. The only difference is that the B point didn't get tested, but a consolidation area did.
This trade set up did have a 5 point risk and would have had you second guessing your trade, but you can't pick and choose your trade based on which ones you think you will win at, you need to have rules in place and if the rules are followed for the buy trigger you should take it and follow the rules for the stop loss and the profit targets.
Scalping off a Demand zone.
You want to see:
1. Strong demand candle followed by an upthrust
2. Pullback into that zone
3. Consolidation
4. Close above consolidation
5. Retest of the top of consolidation
6. Buy stop limit 2 ticks above the closing candle in #4
7. Stop below the low of the retest from #5
8. Target back at the upthrust level in #1
Technically you could have taken a trade off the Demand candle using the same rules as the consolidation strategy listed above.
Here is the Demand candle set up along with the first pullback into the demand zone.
The second pullback happened later in the day and had more volatility and the runners got stopped out before the intended target got hit.
ABC reversals and the double ABC move.
In this chart there are 2 ABC patterns that come off of the supply zone where there are sellers causing a resistance around 4226
First pattern: Basic concept is an ABC move and then point B gets retested and rejected. I use a sell stop limit order 2 ticks below the rejection candle noted by the red arrow. I use 3 contracts, first is a minimum 2 pt scalp, after that target is hit the 2 runners get a stop loss adjusted to the orange break even price. Then the fib extensions give us a T1 and T2.
It's rare for this to be a total reversal in the case of a strong sell zone.. I would typically look for a minimum of 3 tests of the sell zone before I start to look for a bigger move down. In the next chart there ended up being a total of 5 retests of the sell zone. FOMO would have you think that price is going to break out to the upside and you will miss out on it, but price needs to confirm that first with a break out and then a retest of that level, which never happened.
The second ABC reversal had a period of whip saw action that took out stops like crazy, this is key to trying to spot and avoid at all costs.
Targets would be at the next area of support which were down past the 1.618 fib extension.
Risk management and taking small profits. Link back for entry.
The market is extremely efficient at taking out stop losses on days like today. You have to keep an open mind on price action, are they just stop loss hunting or is there a reversal in the making?
Price was still above all the previous areas of support. However there was a cup and handle pattern showing. The price bounced off another area of support from a prior swing low. All you can do it take the trade set up, the market has been bullish, so I am not as quick to go short as I was this morning when we had sellers present.
The market has been all about squeezing out the shorts, so that is a possibility here as well.
Again, I book the minimum 2pt scalp and set my runners to break even. Only about 15 minutes left in the day, so not the best time to rely on patterns, but risk management is a must.
4205 has been an area of resistance, need to squeeze up through that and hold above it.
Close of day another 12 pts added.
When to take a trade when price is falling. The best thing to do is wait for a bounce and then wait again for price to come back into the lows of the previous bounce area and hold as support.
First buy stop limit 2 ticks above the break out candle above the black line didn't get filled and price went lower. Then we had a tweezer bottom pattern that gave a buy signal, and the buy got triggered at 2 ticks above the green candle.
In this case I would buy 3 contracts because there are potential targets higher if price breaks above target 1.
The next targets would be the channel from the overnight session and then the area where the sellers were at from earlier this morning.
EDIT
I should have added my disclaimer....
I always take a minimum of a 2 point profit and then adjust my stop loss up to break even on the remaining runners.
So in this case I actually took a $100 profit and then the remaining runners got stopped out at break even.
Price range with sellers at the top. This is a good example of a topping chart.
First chart shows the bigger picture with the overnight session.
Next chart shows the sellers coming in at the top and eventually they are done and the market drops.
Next chart shows the moving averages on it, I like to use these to try to spot an ideal time for price to finally drop. The key is when all of the moving averages fall below the 200.
Next chart shows price targets using the fibs. If you look left, there really isn't any support until you get to target 3.
I hear ya on that. Congrats on having such an amazing family!!
I had kidney stones from hell last year, was on disability for 2 months.
This year I was diagnosed with HPV cancer in Jan (head and neck cancer). Started chemo and radiation in Feb and just finished treatments 2 weeks ago. I am on short term disability again until mid July. So the next 2 months I need to see if I will be able to go back to work or if I need to extend my disability a bit longer.
I am 56 and service heaters and air conditioners and in California they are mostly on rooftops and we get 100 degree weather most of the summer, so not sure how well I will be able to to jump back into things in the middle of our hottest months.
Due to the radiation on my head and neck, I lost my sense of taste and the ability to produce saliva. So eating is a challenge for me, along with the fact that I lost 30 pounds and went down to 147 pounds.
I also have a problem with dairy products now too and the foods that I used to love to eat, I struggle with eating now.
So I really feel for you with your eating struggles, most people don't realize what a pain in the ass it is when you can't eat normal like everyone else.
I am still in CA, how are you doing?
Had some health issues the past year or so and trying to get back refocused on the charts again.
Gonna focus on 3 things:
1. How to spot and Avoid whip saw trading
2. Focus on price action at previous levels of price consolidation
3. Focus on buy signal entries with stop loss and price targets based on the pattern that is in play
Edit, forgot to add a chart.