Of course it is. But I would say price is in a bear channel. In bear channels one technique is to short in the upper half of the channel and collect profits as price move towards the bottom. So if I shorted at your red arrow I would be averaging down as price went against me even on a pb on the same bar! Maybe on a PB around that red dot I put on your chart. Or the next bar. My BE price would then be closer, I would be loaded up and since it was such a large bear bar in a bear channel the chances are a move back to the low of that bar or even more, are quite high. Look just a few bars later. Zap good profit. I don’t use pivots or fibs in my trading.
You could say there was a nested TR within the broad channel and you would be correct and it is tradable.
Hello volpri, Thank you for the chart mark up. I always use the 24 hour chart because I am up at 7am central ready to trade. I agree with you on the reversal short at the second red dot. lol, I like to wait for a bit of confirmation on those trend reversal trades. but for this case price broke the dotted channel and EMA with follow through, also price created a lower high before the break. All indication of of lower prices back to 8:30am opening area, so I agree with the short here. I would be short with a 10 point stop loss. Trade Management for this case will be Trail Stop method of 3 point stop movement. Trail stop because of the momentum of the bear bars closing near lows.
Thanks volpri for the comments and mark up on the chart. Yes, you are right. There was a lower bear channel, I did not draw on my chart. I was wondering why price reversed after I went short near the red arrow today. I only trade 1 contract for now. lol, I am still working my account size up to higher to add more contracts. I have never scaled into trades before. lol, heard it is only for expert traders.
Watch that 20 ema in bear channels. When price action is floating around in the middle area of the channel you put more odds in your favor to start short on PB to the 20 ema as opposed to shorting on the low of a large bear bar such as where you have your red arrow. While a wider stop loss would have kept you in the trade until the drop down 6 bars later to the bottom of the channel your tolerance for such a wide SL is not palatable. Therefore, to increase your odds of success on a 1 contract you need to take trades when a pullback is close to the 20 EMA when both are running in the middle of the channel if that is where you are going to initiate the trade. So, it I were to trade a one contract no averaging down trade on the BO from the nested sideways range I would try and get in on a PB to the ema. In this case that would be at the DT (or call it triple top if you like) in the PB which is about where my red dot is but 5 bars to the right. It is easy in the heat of trading to overlook the EMA but remember it is an “ average” and gives you a good sense of where traders are valuing the market at for the moment. So in a bearish phase like a bear channel short entries on PB to the ema are just simply increasing your odds of a successful trade. Whether that ema is at the top or in middle of the channel. Watch the slope of the ema that shows the aggressiveness of price weakness. Pretty steep in this case. ok let me throw a wrench in the gears. BO of range (yellow lines) on your big red bear bar closing on it’s low. That Top of that BO point, which is the bottom of the range, is also right at the ema. By the time that red bar closes and you Short (your red arrow) the move down has been several points. So, if I had shorted at your arrow (for fear of missing out LOL) I would have to be prepared to average down on any PB back towards the EMA even if the PB was on the same red bar back towards my red dot or 5 bars later. See what I mean? Otherwise, I would have to have a wider SL if I am not gonna average down or I am just gonna get whipsawed out of the market. Or I gotta to wait for a PB near the ema to take my 1 contract trade. The problem with the latter is WHAT IF there is no PB from your red arrow entry point but price just shoots on down to the bottom of the range without you on board. And it could have! So bottom line, if you are trading 1 contract and have a small set fixed point SL as opposed to a price action SL then you need to wait for a PB from that red arrow entry whether it be on the same bar after the low is made on the red bar or an pb like 5 bars later, before executing your entry. I don’t want to complicate matters but you have to take the play that favors your risk tolerance, while understanding that if there is no PB, from the close of that red bar where your arrow is, then you will just miss out on the trade. You have to look at it this way. Bear channel. Pretty steep bear EMA. BO south of a nested range. BO point just above the middle of the range. BO bar is big bear bar closing near it’s low. What are the odds that price will trade into the lower half of the range BEFORE it would trade up to the upper half? Pretty high odds. But even at that there is a 40% chance price will stop dead on that red bar and turn up. But the higher odds favor south into the lower half of the channel. BUT YOU HAVE TO BE PREPARED FOR EITHER SCENARIO UNFOLDING. But of course you want to play the higher odds play. As concerns averaging down I would have no problem moving my initial SL and averaging down short all the way thru the 20 EMA even all the way up to the top of the channel. Why? 75% to 80% of BO attempts out of the top of a fairly steep bear channel WILL fail and price will go back into the channel at least enough for a good scalp. On the other hand a bear channel on 5 min TF is likely just A PB in the form of a bull flag on a 15, 30, 60 min TF if the flag was made on a bull trend on the higher time frames. The likely resolution of a bull flag is what? UP! That is, the Bull trend resumes on the higher TF. So, in this bear channel on the 5 min TF, if price a breaks out of the top, puts a couple or three of bars with lows above the top of the channel, and especially has a PB that holds above the top of the channel (bo point) AND price is riding above the EMA then I am dumping my averaged in position followed by doubling or tripling up and going long.
Well I gotta go to the motorhome after getting a shower and log into my platform and see what is happening in the markets. Are we going down yet? Where is Dozzy’s beloved Q at?
Good Morning volpri, Thanks for the detailed write up for me. I am at work now (I am not full time trader yet), and I can respond after work or shortly. I had some drawdown today, I just started scalping away and getting the quick profits. Thanks,
Hello Volpri, I have a question I would like to get your opinion on regarding PB and support and resistance. I believe I am letting the support and resistance some. Would you agree that all three green arrows are good pull back entries for long? After you answer, I will tell you why I hesitated on the entries and missed them.
Well it is 12:45 p.m. I finally got my carcass in gear and got up out of bed. Had to clean the juicer as I was too lazy to wash it last time. Then made my corona virus juice for myself and the wife. Then ate breakfast. The showered and here I am. The sun has warped my teeth. Not sure how much trading I will get down today.
April 15th 2020 Well that was quick. Well it is 12:51 about 6 min later. Took a quick scalp made $65.00 averaged down. I am showing the RTH's chart and the 24 hr so traders can get two perspectives on this because this was a long scalp. Will explain in a moment. Gotta run to restroom. That corona virus juice is working!