Pre-open Scenarios

The market saw a big sell off after the cash close – firstly just closing Friday’s gaps but then much further – so that we opened with 113pt gap down. Since Friday’s gaps had not closed in cash hours, they were still targets today.

The question this morning was, would the market carry on falling or would we see a gap-closing retrace?

One month cash chart showing the TL that needs to hold if the corrective bullish sequence is to continue. It had already been breached by the ON action.

The H4 and H1 chart shows the ON action.

On the H4 chart on the left the orange horizontal line is the confluence around Friday’s closing gap and the pink shaded area is where no trade has taken place in cash hours. The pink square on the H1 chart on the right shows the layers of support at S3, Weekly S1 and SUP 1.

What the market looked like at the end of the day

The market responded quite predictably to levels today. There was a small bounce at S3, then a large rally to the gap close target off Weekly S1. the reversal from there didn’t do too much until it had made a new high – most likely all those above at obvious levels and from there it reversed the whole day’s gains.

Market reverses off Weekly S31, stalls as it emerges from the impulse channel formed by the ON action and then reverses at confluence of S2, Friday’s cash close and RES 1.

Which strategies worked today?

From the chart above, the day’s PA can be assessed as follows:

  • The 3Min Bolli system used with pivots captured the long.
  • The break of the impulsive channel also gave some lovely M1 TL breaks.
  • Knowing the location of gaps from previous days and weeks and using pivots with 3Min Bolli captured the short.
  • The higher high during the afternoon was a fake out – although the level made perfect sense as it was Nov 13 low – and you would need to re-enter any stopped shorts here.

How effective was my Neutral Zone? Prices stayed within it all day and the first touch of the top side gave a profitable reversal trade, the market made a false break out during the afternoon and then reversed.
How precise were my levels? SUP 1 didn’t quite get hit as the level was Weekly S1 above it; RES 1 and RES 2 were spot on.

What I did

09:07 Buy x 80 @ 11195 | 3Min Bolli, S3 (late) | P&L = -1R
09:13 Sell x 96 @ 11194 | Reversal off 169 | P&L = 0.7R
09:27 Buy x 80 @ 11182 | 3Min Bolli, Weekly S1 | P&L = 1.7R

TOTAL = 1.4R

Today’s most gorgeous setup

Buying Weekly S3 shortly after the open – this set up as a 3Min Bolli trade.

The perfect entry i.e. at the level yielded 80pts or 8R

For reference: 3 month cash chart at COB yesterday

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