Pre-open Scenarios

Yesterday, as expected, the cash chart 50MA was a great level to trade. The market broke above it early in the session and stayed above it – albeit with a few retests below the level which were quickly bought up. In the US session, the market compressed but stayed above the MA.

The downward sloping TL shown here in pink was also critical to the PA and Monday’s action saw a close above this line.

During the futures session, the market was already trading above the daily cash chart 21-day MA (the higher of the two blue MA lines) so the next traget is the 11181 area.

Regaining the cash chart 50MA – together with a decisive move above the long term TL – has given the market considerable power and we are set for a break out open above R2. Futures opened at 11084, leaving a 69pt cash up gap and a 74pt up gap from the futures close.

The 3-month chart show that although the market is short term trending up, longer term it is range bound to negative as it remains below mid December’s lows. To be defined as a new uptrend, the market would have to clear 11,600 and maintain some momentum.

H4 and H1 charts from morning futures session

On the 4H chart on the left, the areas of interest are the 50% fib from the last trending move as pivot R3. If the market can get comfortably above those the next short term target is 6th Feb high at 11400.

Whatt the market looked like at the end of the day

Key points about today’s PA and setups that worked

Today was a damp squib, with a total range of 50pts from 11116 – the Daily cash chart 21 MA – and 11165. I cannot see a level at 11165 other than R3+10. It goes without saying that a range like this is difficult to trade, but my systems still work.

  • the key level early on was 11116 – this had provided support during the latter part of the futures session
  • continuing the upward momentum the market moved towards R3 at the open with a minor pullback to 11116 at the open
  • the first attempt at R3 just missed and the market went down to the 50% of the last trending move to collect more fire powers for the assault on R3.
  • after hitting R on the nose, the market found sellers which took itz back down for another retest of 11116
  • from the second test of the level in cash hours, the market saw a big fast buy in which propelled it up to R3 and then beyond but only by 10pts

How effective was my Neutral Zone? this zone was tricky to draw because the market was clearly already strongly trending so I used the supporting TL as the lower line and 11189 on the upside as a cash chart RES level. Price stayed within this zone throughout the session.
How precise were my levels? The only level in play today was RES 1, which was at R3; this level gave two profitable trades – one of which managed to grab 30pts within a daily range of just 50pts.

What I did

TOTAL = -0.8R | # Trades 11 | Winners 3 | BE 3
Average R per winner 1.1 | Losses > 1R 0
R-multiples: trades 2:1 or more 2 | trades 5:1 or more 0
Outcome using standard TP strategy and same trades:
(STE at 1:1 50% off at +20 and 50% off at +50)
2x 1R +3 x BE + 5 x -1R = -3R

I closed 3 trades before Stop Loss because they were either mistakes or very weak setups. One of the BE trades reached 1:1 and I took 0.7R as it was a mistake.

Today’s most gorgeous setup

The best trade was the R3 sell. R3 was very neraly hit earlier in the session and that presented a 3Min Bolli trade, but the sell at exactly the level was a 3:1 trade and the best oof the day.

For reference: 6 month cash chart at COB yesterday

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