Although my method is different from DB's, the entry time/price using my standard breakout pullback method that I've been illustrating on ET since last spring is quite close because price action is price action.
I had the exact same idea ND.. all thanks to you! I unfortunately didn't take a trade here, I just had my short bias, so I considered a short at the bounce of the 5 min trendline. (Did you consider a short at what you called your first FBO? It probably didn't fulfill all your carefully researched rules) The unfortunate thing is that my trendline (the A one) was just a bit higher than yours, so when I discuss the long at "L" on my chart, its hard to see because price takes off only once the penetration is solid and then doesn't offer an entry. Based on the attached 5 min chart, I just see no way to make the line break at 4016 like in your chart versus about 4021 like in mine. But my gosh does this setup ever work!
If you ignore the lines, that's what I was referring to, only six minutes earlier. It's not about lines or any complex calculations; it's about the balance between demand and supply. Demand is clearly in charge at the open, but runs out of steam 18m later. The higher low thereafter suggests that demand is getting its second wind. If one trades according to the SLA, the DL drawn at the beginning is broken, after which one waits for the first retracement to short. If one does, the trade fails immediately due to the higher low, the "dog". Once the SL is broken, one takes the first ret thereafter, at 1000. If one has to draw the lines, there's no reason not to. But, again, the focus is on demand and supply. If however one is afraid to take the trade regardless, then it really doesn't matter what he plots or if he plots anything at all.
If I may add a visual (hopefully my lines aren't too far off the mark and the entries you mention are drawn in properly). Unfortunately, the DL I would draw after the long entry would also break. Granted, the fanned DL works, but price would go against you over 5 points before turning back up so I doubt I could still be holding that long.
I think that's a decent short setup because it's a small stop loss and you'd expect price to drop a bit off that UTL, but it definitely doesn't fit my plan. Once price breaks thru the 5-min 1-2-3 swing high (4007.25), I'm only looking for longs unless a valid short signal occurs (lower high, lower low). We got the lower low, but it was only by a few ticks. That's a bear trap setup, so I'd be looking for a low risk long setup off the trap.
Db, if I understand correctly you are suggesting downside targets for the NQ. Why did you initiate a short or will? Is it just because the market is at the top of the channel you currently drew? Because price has been at the top of channels on countless of ocassions and ended up breaking upwards with the trend. I don´t understand why you are suggesting short targets when I can´t even see a short entry, in fact I see a long entry "Dog that didn´t bark entry" since price failed to break support at the 4000 level and the uptrend remains intact.
The targets refer to the upper and lower limits of the trend channel as well as the mean. Since price is not likely to travel from the upper to the lower in a day, there will be both long and short opportunities depending on the balance between demand and supply, today, for example, the early morning short followed by the long soon after 1000 followed by the short when price reversed off the SL at 1130.
Is this the correct chart Db? Yours seem to show price at 3999, but we are at 3950, which of course based on your chart seems to be the mean, and where we are getting our bounce now.