FIVE POINT CHANNEL

WAS     this a day your chart scale kept changing, or were you changing it?  Two point candles with wick tops and tail bottoms lapping and overlapping. If you look at a 15m chart, you see we were in a decline from the Euro session, and by mid morning we were back to those highs.  From there we were on a roller coaster going from high to low and back again.

Personally, today's trading was compounded by interruptions related to the end of the QTR, and the whipping action was more than willing to remove the protective stops place into profit positions.


To buy LOWS sell the HIGHS would seem common sense, and I'm sure  there are traders discussing that strategy  this evening wherever they gather.  But in real time, what is high and what is low is not as obvious.  Albeit, a 1321/22 long or a 1324/25 short did have merit.  It was the road in between that appeared as treacherous as a winding, ice laden mountain pass.

So, if you did not play the highs nor the lows, what options do you have on a sideways channel?

1. You could attempt a long/short at previous support and resistance, and select an appropriate stop loss.
2. Play the EMA, long a bullish cross short a bearish cross.
3. Play other recognized MA"S
4. Review you loss strategy;  does the market action warrant a larger protective stop?
5. Or, stay with you plan and accept that trades may be quicker to stop out, as opposed to your normal desire for 2, 3, or more point runs. 

Essentially, you are developing a plan to address steady runs versus one for overlapping thrust and pullbacks.


5m ES

The high and the low were established rather quickly, and we had a PA wave in a defined channel.


Some of the trades for today:

We began with some of those LOW longs.  The choice was to play with a normal stop, and move it into profit when PA hit X price.  Some will work better than others, but there is no second guessing your initial risk established by the stop positioning.  Both early cases were lows running back to, and potentially crossing the EMA.

The 89 and 200 ma was deemed an acceptable support for a long entry.  Again, moved stop into profit.  It would run or hit the stop.  With the wicks and tails, the initial assessment of risk was not changed.


Near the end of the day, we had a nice bearish channel in the 512 chart.

In the absence of "holding" through the thrust and pullbacks, an acceptable trade was the channel TL's with a standard stop loss.  This trading was more productive than the harsh wicks & tails seen earlier.