Today is a two chart review today, with excellent reasons. The 1 minute chart needs to be free of distractions, but important levels need to be kept in plain view. So on the 10 minute chart I have levels outlined as per my prep. Arrows aren't trades taken, and there are no exits so the trades weren't even really managed. They are only there to show what might be a good trade based on what price is telling me. 3492 for overnight low, 3500 for the high, 3496 for the mean. We didn't get there, but had to be ready for it if we did. 3516 was our overnight high, and below this we also have a tight trading range just before open (but this isn't marked in.. although it comes into play) 3524 is yesterday's high. So lets go read price! A - Just before open, price drops and settles to about 3509. This was the mean of the pre-market range yesterday. B - At open, we instantly rally to 3516, our overnight high. You can see the double top in the two adjacent bars in that the close of one is below the high, the open of the next is below the high, then it goes up for a tick and then it drops. The fact that this double top happens at the overnight high is a perfect reason for a short, hence the arrow marked. It is critical to get in at a good price, and as Db says, you want to get in during a state of confusion. So my entry would be based off a RET in the right tick which I can watch on my one minute chart, but I also have a tick chart up so my eyes can quickly scan that. This ends up being an excellent trade. C - Price turns around at 05. I'm not exactly sure why, and because so much trading has happened around these levels it might be easy to find some level that matches up with this, but the REJ is noted nevertheless. D - Here, this bar forms, and although it opens and closes below the midpiont, the low of this bar is still above the low at C. A long above here can be tried. Price either rallies up or it doesn't and hence would never be triggered. E - This an an even better long. We break out past the overnight high at 16, have a clear RET between these two bars, so lets try a long. F - We don't get too far, and we note that we stall at 24, the previous day high. Sure we break past 24 and get to 27, but if we are long from earlier, we just sit back and wait. G - The bar after the top breaks lower than the rejection bar, and since the low is now below the previous day high, we can quickly try for a short below this bar, maybe at 22 or so. We have good reasons for taking a short here, its not just in the middle of nowhere. H - We begin to stall at the overnight high but break through, we also come back up to test it. If we got in at G, we are sitting pretty. If we shorted below 16, waiting to break back into this range, we get very nervous when price comes back up here and makes it to 17. I - The above bar opening on the low, and closing below the midpoint points to a rejection, especially once again since we are watching the level of 16. This nuance I only notice now, in review, but it makes sense. So a short below this would be another well thought out and legitimate trade. J - We clear the lows of C here, but overlapping bars show a halt. I'm not exactly sure why here, 3502. I know that 3500 was the mean a couple of days ago, and this number has come up over and over again, but I don't have this marked for today. At any rate, we go back up. This would be a good time to point out the dashed blue line on the one minute chart. We can call it roughly the mean of the range prior to the open, but this to me became evident after price consolidated after we come back up from J. It is the 50% level of the down move, and the mean if this turns out to be a range. Traders are completing lots of transaction here, and we see price move equal amounts away from this mean. K - We get to just below 24 again and stall. Two bars after the high have lower highs, so lets try for a short. We get back into the mean. L - This is an interesting area. A short or long, above or below the 24 level once again can be taken. M - Here, after a consolidation, I would think long again. We don't have much to stop us from going higher above us. It would trigger, but doesn't get far. Ok.. enough. I wasn't exactly trying to trade today, shame, most of my calls were good. What I do feel is more confidence though. Having more reasons to take a trade based on price action around the outlined levels will help me put that trade on. Really going to run with it now!
For April 21 Overnight, price has stayed in a very tight range of 3529 to 3535, the mean of which is 3532. We can also see that this mean is roughly the apex of a hinge that started forming from the previous day, The previous trading day saw a high of 3542 and a low of 3492. We should also plot in the mean from the previous day of 3514 that gave us some trading opportunities. My channel is a bit more difficult. Reading Db's posts, the 17th put the mean at 3490 and the top at 3560. I haven't been able to reproduce a channel with these values, but today would see these values be lower by roughly 5 to 10 points lets say since its a down slopping channel. This means that we are near the top at the moment, and the mean and lower line are further down. So what to do.... Since we are in a right range, breaking to the upside gives us the top of the channel as a possible landing area, 3542 which is the high from yesterday, or 3600, the high from a few days back. Breaking lower, we have multiple areas to provide a halt to price, such as the previous mean from yesterday of 3514, the previous day low of 3492, and the mean of the channel, somewhere below 3490. Time to go watch this tight range...
Today is funny in a way because I was using the excuse that there wasn't enough volume as a reason not to take real trades, but it ended up being quite a good day in that price was reacting quite well to the levels I had outlined in prep. So I'm just left with all the feelings of CWS, which are of course useless, so lets just learn and move on. As yesterday, trades shown on the chart are just "lets see what happens if we do this". The idea here though is that each trade will have a well thought out reason for why its placed right there. Perhaps not well thought out as this would lead to too much indecision, but at least a solid reason for why this trade isn't just in the middle of nowhere. A - The open was quite uneventful. Seeing the breach of the low of the ON range, lets try a short here. Has to be scratched right away. B - Here a short is taken on the failure to reach even the high of the ON range. On the 15 second chart, this looks like a clean entry and I figure its good for at least a return to the lower line a few points away C - We do breach the low of the ON again, and even the previous swing low at A, but it doesn't last long. Shame a long isn't taken here. D - Here we have a nice setup, again a REV of the possible failure to breach yesterday's high. I am still of the impression that price won't be moving too far today because there just aren't enough trades trading, so back to the range seems like the LOLR. E - We get to the low of E, which happens to be the ON bottom of the range. The thing is that once this level has been breached, both by the low below A and C, I wonder how important this level is now. Nevertheless, price turns around here. F - So a bit of hesitation here, but using the rationale from E, this level at 35 is probably not all that important anymore. If anything, the mean of the range is still in play as price is moving above and below it, but the extremes have widened. G - This looks like a great entry for a REV. I didn't take it, I wonder why. I think in chat a long was mentioned, so perhaps that threw me off. It didn't go far mind you, and price had only a bit of hesitation breaking through 42 on the second try. H - Hitting a high of 46 was as far as traders were prepared to go. It sticks out like a nice REJ now, but you can really call it until a few bars later. Shorting this at the level of roughly 40 is the trade of the day! Looking back at it now, up certainly looked good, and there were lots of levels on the way down to halt the price drop. Getting in early, like at 40 would have been absolutely necessary. I - If I did initially short at 40, price coming back up to 41 here would have caused me huge concerns. Shorting at 38 just below this would of course be an excellent trade as well, but this is just based on looking at the chart now, knowing how it all turned out. J - The low here is once again reacting to the low of the ON range, can it still be significant? K - We make it to a low of 3516. 3514 was outlined in prep as the mean from yesterday that price moved around quite a bit, so is this close enough? L - There two bars before L remind me of the exercise I did with Db a few days back. The first bars opens on the high and drops, next bar open on the low and closes on the high. Its a great two bar reversal so to speak. It forms a nice double bottom with K, so a long above 23 could be tried. Ah, so many things I could have tried that would have made me forget all about my 8 point loss from a few days ago. Yes, that is still on my mind. Today is filled with CWS, and in general, the fear is ever present. At the same time, it has only been a few days since the light bulb went off and I am really looking for trades at specific levels, not just line breaks, and this is proving to be an excellent strategy. So its just a matter of getting over the fear. Whatever trades I miss, whatever messages the market is telling me that I don't hear are I think not going to make me lose huge amounts of money. They might mean I miss some good moves, but I do believe I am seeing enough to put trades on, and my scratching, based on price just not doing what I thought it would do, or losing a few points, is good enough to get me out of trades for minimal loses. As it stands, price is now at pretty much at the mean of the ON range. We explored both extremes of the mean and came back to rest at the mean! So we have a repeat of, paraphrasing Db, "The Gorilla In The Room"
I have volume plotted on my charts. Usually at the open, we have 3000 to 4000 contracts per minute. Today, we were hovering around 1000. I stand to be corrected though if I'm misunderstanding something!
Yes, today it benefited me in talking me out of trades that I think would have added up to a profitable day! On a serious note, I find that I do watch the volume and when price jumps a bit on low volume, it leads to moves that aren't as strong. I haven't explored this enough yet though. On a very minor note, it helps me see where the open and close of a day is when I have a really compressed chart up. It helps me to see better where the pre-market is, what the overnight action is. I could of course just leave the volume up on my 5/10 minute charts, but leave it off the 1 minute charts if this is in fact causing more harm than good.
Point is that incorporating volume prevented you from profiting from a 30pt downmove and a so far 25pt reversal. You may think that it helps you and feel that it helps you and believe that it helps you, but if you insist on using it, you're looking forward to a great deal of testing to determine whether it actually helps you or not.