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Catching Big Waves - a trader's journal of surfing the the markets
I obtained it through group that I paid to study with, and am not sure I have permission to share the actual indicator. But, it is a standard RSI that should come with most platforms. The only difference is that it was modified to show a color change at an OB/OS condition, which on that chart is set to 90/10. The period is 2, and "calculate on bar close" is set to false.
Now that the 2:30 rush is off, notice that the last trade target would have hit... Today I was knocked out twice by timing...A short I took before the 10:30am EIA, and a long before the 2:30pm close. Both moved in my direction after I got out, but the timing of both was not right.
It seemed so far away this morning, but crude made it down to the daily trendline. This is an area to watch for a long trade with a good risk/reward.
HOWEVER, the last time crude got to this channel we had a beautiful ABC pattern and decidedly bullish structure. This time we have that somewhat ominous H&S pattern casting a shadow over everything, and stock indexes tumbling down. And, the last time crude touched it's daily trendline it was a near direct hit for a double bottom, but this will be the third attempt to bottom here, and third attempts often break through (stops). That is why I showed "Zone 2" on the study this morning.
Unfortunately I have to make an unscheduled trip to Dallas in the morning and will be gone before the market opens.
Notice the big volume up bar at the jobs report, and then the big volume down bar around 9:55am EST. I'm flat, and not directionally biased right now, but the market is trying to tell us something in the area.
I did not have time to explain this when I posted. Things were happening fast and I got a little worse entry price on the long because I was messing wiht trying to show images here. The fib lines above just show simple 100% measurements of 1) the most recent wave down, and 2) a previous wave of similar length.
So;
1) Fib support on higher timeframe
2) The high volume area I mentioned on the 1 minute chart above
3) The fact that we had such a burst up on the jobs report
4) The fact that the huge down move yesterday meant we had a lot of shorts in the market (many frsh today probably)
caused me to look for a reversal. When I then got the reversal on the 9 range and 6 range, I was ready to look for an entry.
Trades like this are countertrend in my mind, and as a rule I prefer to only trade with the trend, but when everything lines up I like these trades. I posted something previously about "In through the out door" where I was referencing this type of trade. Not sure if I explained it sufficiently then, but I may go back and read later.
As I write this (this is an edit post made a while after I first showed this chart, and after I closed the 71 tick long below) the market has come right back into another area where I am looking for a long reversal. It is Friday, and shorts don't seem to like the Friday closes...
Edit comment after the trade was closed; I should have tried to enter closer to 86.20, but was feeling rushed by trying to trade and comment and decided to go market. Not a good move on my part, as patience is a key ingredient to succesful trades. I will reflect on that more and try to do better in the future.
Sometimes I allow myself to break my rules. Still working on that within myself. breaking a rule like not getting in at the perfect spot is a lot more excusable than breaking a rule about moving a stop, or averaging down, and no where near the sin of using dangerous levels of leverage or trying to catch the bottom...
I closed for 71 ticks. Personal policy to take a good win on Friday. This one could still run, and I may get back in later, but we hit the 618 retracement of the previous move down, and we are in bear mode on a higher timeframe.
