1028.75, within 1/4 of my target. Closed my puts for 50% gain and now long ES from 1029.25. edit: I like the dragon and there is also a divergence here. But to be conservative, and acknowledge my bearish outlook, I'lm cutting half at 1030.75 with a stop at 1027 on the other half so no risk here. Target 1040.
Warning: We already bounced 3+ pts from the predicted bottom, so the pattern has been played out. Remember, there is no prediction of the size of the bounce! It could be a 10+ rally or as little as a 3 pts bounce.... My reading was 1034 cash as 3rd bottom prediction and the LOD so far has been 1033.57..... Thanks for Vmaxer for noticing it, he posted his prediction when cash was around 1043 so there was plenty of time to get in and enjoy the ride....
Thanks guys for the amazing thread. Pek called the bottom a couple of months ago at 666, now we have touched 1075 already which is a 61% move. Where to now? Good luck and thanks for sharing the dragon!
Mini dragon on the 5 mins chart. Height is 5 pts and Failure at 1036 cash, so 3rd bottom is around 1031.... (Although there is RSI divergence against it.) Edit: Here it is although it didn't drop the 4-5 points expected...It had double bottom with strong RSI divergence, one of my favorite set ups... Edit2: I spoke too soon, chart coming later...
Ok here it is. The failure usually happens at the SMA line so that missled me, because the real failure happened 1 point higher above the SMA. Height was actually 5.5 pts and the Failure at 1037, so the 3rd bottom was expected around 1031. We overshot it a bit, I guess end of day selling... The SPX LOD was 1029.44... This chart doesn't show it, but from the LOD futures bounced up so far 3 pts, so the pattern has played out again... Now my theory is that when there are 2 dragons back to back and the first only has a small bounce, then the 2nd usually signals a bigger trend change/rally. I left the RSI on the chart to show the nice divergence since noon....
posted in ES journal 20 min ago @ 30.50, ES now at 32.75 (about halfway there): my contribution for the day. I have a limit buy at 30.5 which hasn't filled yet, but if it does after 12:25PM then my stop is a point. Dragon H=8.25 Failure was perfect at 4.25 (1028.25) 3rd top/reversal target = 36.5 The triangle points to same area as well. (15min bars on today's RTH)
Yesterday had 3 dragons, a rare occurence on the same day. One undershot the target, one was perfect and the last one overshot it. Here is the first, I draw the lines where the 3rd top should have been, 2 pts higher: Here is the 2nd one, this went by the book: (failure at the SMA, numbers macth perfectly) The 3rd one overshot the target by 2 or so points:
Pekelo, How do you personally trade this pattern in terms of initial stop loss, profit taking stops, entries? You have done a good job showing the setups, I wonder about the other critical stuff
It depends on the size of the pattern. So you have to adjust those for each one. Bigger the pattern, bigger your expected 3rd top (target) and your stop loss. Let's say when the Height is 10 points and you have just noticed the Failure, you go long (in case of a topping dragon) and you expect the 3rd top app. 10 pts from the Failure. According to the rules, it shouldn't fall BELOW the Failure again, so you can put a stop loss below it. Now as these last 3 charts showed, the 3rd top will not always come at the expected price level. So it helps if you play with more contracts and you can scale out when getting close to the target area. In the example of 10 pts Height, it shouldn't overshot it by more than 3 points, so if you switch to short at the 3rd top, 1/3rd of the Height as stop loss should work...