30 Oct – Up down, up down, false breaks abound
30 October 2018
1 Nov – rapid 1st of month ascent
1 November 2018Pre-open scenarios
It was clear from the charts last night that we were approaching the upper side the daily channel that had contained the most recent impulse move, and I knew that if it broke, we could see some big gains. Unfortunately the TL broke before the futures open and it stayed broken, so an easy break of the TL did not set up. This screenshot was taken half an hour into the futures session.
We also had the cash chart weekly 200 MA above. This line has broken and stayed broken for the first time since xx – indcating that the market has changed structurally. This line was hit today but the market made no headway above it.
The market opened higher, above CBOL, yesterday’s high and then it zig-zagged between KLs, holding onto the gains and filling two of the open gaps from 15 and 22 October.
Strategy for today’s PA
- Before the futures open, we broke the KL so as long as that holds we want to get long.
- A perfect place for a long entry is a retest of the TL, and if prices go straight through that, buy the Ex-gap close, which was also a BNR and with CBOL below. The fast move into tells us it’s even more likely to be a cracker.
- Confluence at the cash chart weekly 200 MA and R2 stopped the rally, prices compressed here and then reversed. By this point it looks like the market will hold onto gains but range between yesterday’s high and the thick layers of resistance above. So until that changes we need to be buying and selling reversals at KLs rather than looking for TL breaks.
- Meanders down for a late morning retest the TL again but this time it forms a higher low. PA for 50pts into the level was impulsive, giving a perfect buying opportunity at the TL retest.
- The buy idea was supported by the unfilled gap at 11497 from 22 October; the market spent the afternoon stair stepping its way up to that before reversing
What I did
08:12 Sell x 59 @ 11463 for 3Min Bolli | P&L = +1.8R
09:11 Buy x 79 @ 11406 for Ex-gap fade | P&L = -0.7
09:14 Buy x 78 @ 11395 for Ex-gap fade | P&L = +2.2R
09:41 Buy x 18 @ 11469 for H1 level break | P&L = -1R
10:47 Sell x 20 @ 11424 for Intraday TL break | P&L = -1R
10:58 Buy x 80 @ 11414 for 3Min Bolli at TL retest = +0.5
Today’s most gorgeous setup
This a hard call because the market reacted to predictably to levels so that buying the ex-gap, selling the R2 + weekly 200 MA and buying the TL retest netted 80-90 points. But just for the speed an precision of the trade, it has to go the ex-gap fill fade.
Because there was CBOL below at 11387 and R1 at 11384, you need to give this trade a little more flexibility and watch for those levels. You also get two chances at this trade.
Using stop-to-entry after taking partial profits is madness on these kinds of trades because you will get stopped and then the market will zoom away without. If your entry is at a KL, you don’t want a stop at a KL otherwise it will get hit on the retrace.
This trade even set up perfectly on the 3Min Bolli , clearly demonstrating how a fast move in indicates and nice, fast move out again. With two more layers of support within 10pts of the gap, this trade could easily have been done as an order while I did something else…
