19 Nov – Break long a damp squib, break short +100 and still going

Pre-open Scenarios

The daily cash chart is starting to compress: every TL break is bought up, but still the market can’t make new highs. So this week, everything depends on upper TLs being broken and whether the market can make new highs.

Ideally I want to be long in the market before the major TL break so I don’t get whipsawed by sell orders at the line. I do this by trading minor TLs on lower TF charts as price moves upwards.

On the charts below the major TL is marked by the orange line on the left hand (H4) chart to get into the trade I wanted to by the minor TL’s on the H1 chart (right). I wanted to long from the open because:

• We had regained the cash chart weekly 200MA
• A minor TL had broken ON (circled)

My plan was to buy a break of the pink line (chart showing the wrong Neutral Zone).

What the market looked like at the end of the day

All the above came to pass and I duly got long but the market did nothing with it – just put in some ranging action above the TL, eventually breaking back into the Neutral Zone, then breaking below the cash chart weekly 200MA. This paved the way for a 100pt break of the lower TL.

Here’s the M15 chart at the end of the day:

How effective was my Neutral Zone? Once I got the correct shape after the open, it guided me into the shorts this afternoon. How precise were my levels? RES 2 was spot on, SUP 1 and SUP 2 were also trade levels; CBOS was more relevant than SUP 3

Strategy for today’s PA

TL breaks above the Neutral Zone

The upper Tl was broken pre-open, so I hopped on board using a wider SL. then the next upper TL broke in the first few mins, of the cash open. So TL breaks worked today, but since they went only 30pts, it was necessary to take partial profits and get out. To make the best decision for these longs, I need to be able to distinguish between ranging and trending PA.

3Min Bolli once back inside it

Once the market got back inside the Neutral Zone, it gave several 3Min Bolli opportunities at my SUP 1 and SUP 2 levels. RES 1 was the best sell but it was above the Neutral Zone.

This was the PA above the TL on the M1 chart:

TL breaks below the Neutral Zone

You can see the difference between the PA and especially its relationship  with the Bolli bands in the chart below vs. the chart above.

What I did

08:01 Buy x 23 @ 11395 for H1 TL break (opened above)| P&L = +0.5R
08:15 Buy x 77 @ 11342 for Fade gap fill| P&L = +1.8R
08:35 Buy x 93 @ 11365 for M1 TL ?? | P&L = -0.2R
08:47 Sell x 79 @ 11374 for 3Min Bolli + ??| P&L = -1R
09:02 Buy x 93 @ 11383 for M1 TL + ???| P&L = +1.2R
09:22 Buy x 23 @ 11390 for H1 TL by hand + ??| P&L = -0.1R
09:40 Sell x 93 @ 11399 for mistake| P&L = -1R
10:44 Buy x 78 @ 11347 for 3Min Bolli + ??| P&L = -1R
10:45 Buy x 94 @ 11341 for Fade gap fill| P&L = +0.7R
10:53 Buy x 85 @ 11345 for TL Entry fade gap fill| P&L = -1R
14:57 Sell x 23 @ 11325 for H1 TL by hand + SUP ??| P&L = 1.5R
15:55 Sell x 21 @ 11314 for H1 TL break| P&L = 0.6R

TOTAL = 2.1R

Today’s most gorgeous setup

Taking a 3Min Bolli at my level RES 2 (see first circled area on blue chart above). To do this you have to spot that although prices have broken the Neutral Zone, they are just ranging above it and therefore you can look for 3Min Bolli opportunities.