21 Nov – a lesson in spotting and trading a bounce in a strong downtrend
21 November 2018
23 Nov – ranging day that closed higher to fit with Black Friday tradition
23 November 2018Daily chart
I wasn’t trading today because I was studying executive function to develop content for the sister site apartfromme.com , but here’s a summary of what happened.
Two TLs from the daily cash chart are controlling direction. Yesterday the market opened above the lower blue TL and that gave a bullish tone to the whole day until we hit the pink TL. So today, if the market could get above the pink TL, we would see more upside but the likelihood is, given the overall bearish picture that it would represent from pretty hefty resistance.
This is what the H1 looked like just before the futures open.
The key things to notice on this chart are:
- The market formed a clean, non-volatile up trend yesterday until it hit the cash market TL.
- A compression formed ON against the major TL (pink line on the cash chart)
- The pink circles are Key Swing Points (KSP)
What happened?
The TL broke and the market headed straight down to yesterday’s close and then ranged for the rest of the day. It retested the Tl – which was also R2 – and rejected it again.
Active key levels and trend lines
- The TL as described above
- Weekly S1
- Yesterday’s low
- Fibs
Which strategies worked?
TL break adjusted for entry into Close and 169
The TL gave you the whole day’s move with a nice tight stop.
Using Impulsive/Corrective sequences to short
From then on, with the critical TL rejected, the best strategy was getting short using each pull back.
3Min Bolli band
The 3min Bolli set up at the retest of yesterday’s lows was an imperfect setup because the level was missed by 3pts, but the Bollis and pin bars indicated a buy.
The market drifted down to the level which is not in the trade’s favour, BUT there was confluence there with yesterday’s low, 2 fib levels, a horizontal Bolli Band and the market is already 150pts down from the futures open.
Fade 169
Another possible set up was to fade the 169. This was not a trade to hold on to because of the number of other levels in the area, which needed to be used as 20-30pt targets.
