With the exception of a couple little pokes here and there, the NQ stayed in a 10 point range. the overnight high and low. 25 and 35 with 30 being the midline. Three lines. I bet most of us had the same lines drawn this morning. The open saw us test the lower line, reject it, and shoot up to the upper line (even exceeded it) without so much as a hesitation at the midline. Observing this, it's hard to stay unbiased and try as I may, I could not help predicting that price was going to pullback a bit and make a new high. Than at 9:53, just when I was expecting a resumption of the move up, I saw the struggle. Watching the DOM I saw the offer 3134.75- no takers. It would not print the .75. At least six times in three minutes the sellers kept trying to sell at 3134.75 and nobody would buy. There finally was a print at .75. One contract. Price quickly pulled back to the mid line and tried again for the 3135 area. Three more times they tried, and at 10:30 there was no one taking the offer at this level. I didn't think, I knew this was the high for the day. A couple minutes later and we were below the mid line attempting to hit our lower area of 3125. And then, at 10:38, I saw the same thing. Price was banging on the mid line and several times the offer was 3130.25 and NO takers. Again at 10:40. The chart only shows that we stopped there. It does not show that it actually tried to get above. Someone was willing to sell it, but no one willing to buy. I quit watching soon after to soak in some sun and seawater. So, why do I feel this is important? Why is Fortydraws trading so well? He's reading the tape. And he knows enough, (I hope) to sit out the hand if he cannot read the tape. Like yesterday. Maybe today. You see, the science of price action is simple. DB can show it to even a simple minded Horseshoer like me. It's exact. Hinge, Mid line, trends, breakouts, etc., etc.,etc. Draw straight lines and wait for price to do it's thing. But there is an art to reading price as it reacts to these levels. If you look at the chart from 9:52-10:29, the chart says we are making higher highs. But the tape was telling you that there was no gas in the tank for the uptrend. It might be possible to trade by just looking at the lines. Buy here, sell here. Like a scientist. It might also be possible to trade without a chart. Just looking at the ebb and flow of price. Like an artist. Seems to me now, it might be best to be good at both. Sorry to ramble , I'll shut up now. I'll be observing again tomorrow, Most likely for a while longer to let this sink in.
I also expected price to reach 48. After all, it was only ten points. But this bias issue, and the clinging to what one wants to see rather than what is, is the chief reason why I decided to institute the lines. After all, if you can draw a straight line . . . Some who have had serious problems with these issues have found salvation by exiting when the line is broken. They still may have issues with re-entering, but at least they've stopped losing money. I know not to argue whether there's a line there or not, but many people just can't give up fighting with the market.
And fighting the market is something I've been doing all along. Thanks for leading me down a different path.
So price fell out of yesterday's hinge yesterday evening and, as typical, U-turned and went and is still going the other way. Given that we are only 5 or 6 points away from the top of the trading range, watch for reversal opportunities. These will likely come well before the NY open. If you went long yesterday evening, congratulations.
Pretty clear hinge since 8:30. A downside breakout that reverses higher might gain enough interest to break out of this trading range. A break out higher that reverses near 48 could start the next trip down toward the lower end of the range. I sense a need to exercise patient nimbleness at the open.
Not to be a pill, but the reversal entry was at 0900. The higher low 15m later set up a potential hinge which we fell out of at the open. Whether price finds support at this morning's trading range remains to be seen.
40pt trade so far for anyone who waited for the open. A couple of points more if one went short at 0900.
For those who are following this, you have an excellent example of a "V" reversal off support (I won't go into why 3100 is support). The first retracement is at 1009. If one were to wait for a test, which would be expected given the climactic nature of the freefall and bounce, he'd likely be pissed that he waited. OTOH, buying that retracement would be somewhat testicular. You pays your money and you takes your chances. If one entered a short at either opportunity, he could hardly complain about his results even if he didn't take the bounce at all.
Looks like the market was printing money today, 2 trend days in one. I am not sure I could have stayed in at the open as the RET was way too deep. Any advice about that?