Remember the diagram from yesterday's post. Changes in the TL's give a clue about the health of the market. 6E begins pre-open with a steep bullish TL, and appeared to be heading for a BO of the top target at 4550 (#1). The PB close at the target was positive, and the next bar did yield a 5+ opportunity. This is an aggressive target BO trade as we have no prior test of the target. A + or - on this depends upon the trading management of the trader. Even if a loss on the first reversal, the BO of a steep TL tends to be bold and, in this case, it was reasonable to think the EMA would be a magnet.
The testing of the BO target can be seen at the lower target (#2). Bars 3-5 test it, and are trapped by the EMA.
One thing we are trying to do is issue an alert when price is near/at a key decision point. It is easy to see on the chart, but traders are involved with several trade instruments and may not be focused upon this particular chart. No doubt it would work better if automated, because price can move fast, and the first priority is to enter/exit a trade; not write about it.
After that trade, a new BO target #3 was added. Also note the new TL, and that it is declining in angle suggesting market weakness. Two or more key elements being broken is a must take trade. By b24 we have EMA and TL failure, leading to the bearish TL #4. Price declines Ala an elevator and stalls as it digests the action. New afternoon targets #5 and #6 develop, and produces.
Watch for the alerts. They will be as timely as possible without a compromise to trading.
click to enlarge
Sample commentary:
[10:04] <Chartmaster> alert 6e lower test declining ema
[10:06] <Chartmaster> 6e +5 runner at be +1 4886
[10:09] <Chartmaster> 6e stop to 4480
[10:11] <Chartmaster> alert es weakness above the bo
[10:11] * Chartmaster [ covers 6e @ 4480 +5 bal ]----
[10:23] <Chartmaster> alert es and 6e bull bias aggressive bullish long
[11:19] * Chartmaster [ sells es @ part +2 stp at 48 ]----
[11:19] <Chartmaster> alert es conservative upper bo
[11:21] * Chartmaster [ sells es @ part +4 runner 49.5 stp ]----
[11:29] <Chartmaster> alert 6e at lower bo
[12:08] <Chartmaster> away working trades es out bal 49.5 +3 6e bo 4585 (typo 4485) still in a 1c runner.. the gift that keeps on given..
[12:10] <Chartmaster> mega candle 6e exit 4430
[12:41] <Chartmaster> another elevator ride 6e (note: 12:40 1 min entry)
[12:41] <Chartmaster> alert es at lower bo short
[12:46] <Chartmaster> es per blog discussion we like 2nd attempts for the bo (aggressive is first attempt) see b35-38 holding for possible bo ema negative we take the trade same for 6e bo http://screencast.com/t/z8G4ao0EyV
[12:49] <Chartmaster> es exiting 1340.5 NOW 6e 4370 stp
[12:52] <Chartmaster> stp hit 6e
[12:55] <Chartmaster> am bo 4518/4485 pm 4438/4496
[12:56] <Chartmaster> es still 42/50
[13:07] <Chartmaster> current look 6e es 5m http://screencast.com/t/dPdONPRyu
[13:10] <Chartmaster> alert es at ema
[13:12] <Chartmaster> shorts in es
[13:13] <Chartmaster> 6e elevator lol
[13:13] <Chartmaster> same setup 6e
[13:14] <Chartmaster> exit es and 6e
[13:17] <Chartmaster> +2 es +10 and +20 6e out and done..
TODAY: ES
Traders will watch to see if instruments begin to sync, or move together. ES too had a nice pre-open pop, tested the upper target, (#1) and returned to the EMA. It stayed above the lower target #2 and formed bullish TL. The entry was at 46.5, and b19 hold at the EMA should have been considered.
Price briefly crosses the upper target,and begins forming a bearish TL. B29-30 is breaking two conditions (TL and EMA) and should be a trade consideration. Price is moving away from a declining EMA. Your hold should be to the lower target #2, or cross of the EMA. The target fails, and so does the CT pullbacks to the EMA.
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