Trading a bear flag yesterday netted a potential 300pts. But today the same strategy lost 3R. How was the PA leading up to TL break different from one day to the next and how can I filter these kinds of trades in future?

Against the success of this trade
1. It took 10hrs to get the 38.2% retrace of yesterday’s 300 pt move
2. The move into it was fairly fast implying a reversal rather than a break
3. The gap was just below and this is what the market was after, not the TL break
4. One of the TL points (there were only 2…) was in the ON range
5. Yesterday was a expansion move (1%+) that the market needs to digest

This is the 1H chart showing the retrace getting to 38.2% ON and the TL I was trading (upward sloping in pink)
This is the situation just after the Futures open – you can see how much more convincing the retrace is compared with yesterday

In favour of the success of this trade
1. Prices had pulled away from the upper TL before the break and made a LH

You can see from the day’s PA that even when the TL does break, it is not a spectacular move and quickly reverses.

This market does not want to go lower today – it is more than happy to be supported by the TL. It doesn’t want to go up much either though. It just doesn’t to do anything much..

On days like this, the 3min BB is much better strategy to buy and sell extremes.

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