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Pre-open Scenarios

The high yesterday – if you include the futures session – was 10845 and this was swiftly rejected. The question today is, was Friday’s move a bear squeeze or an indication of a longer positive move for the market? The impulse move corrected to 61.8% fib yesterday, possibly the pause the market required to set itself up to make further gains. Or, was the market getting ahead of itself – desperate for some good news – thereby making an unsustainable move, one without legs.

The H1 chart s developing a triangle and has compressed ON, so the resolution of this will give us an indication of what will happen over the next few days and how the bullish question will resolve itself.

The H4 chart on the left shows the most recent swing high (2nd circle) and the unfilled gaps (1st circle). On the H1 chart on the right, the compression is bounded by the orange TLs

The futures opened with a 27pt gap up at 10775 and the cash at 10769 with a 21pt gap up. This filled in the first minute.

What the market looked like at the end of the day

Key points about today’s PA and setups that worked
  • The market looked weak during the futures and broke the TL that was the lower boundary of the H1 compression.
  • The cash opened at the 169 and went for the cash and futures gaps immediately and then staged a powerful reversal; this would have been a great opening spike to buy.
  • From there, it had enough power to burst through the upper boundary of the compression and straight into RES 1.
  • The break up from the compression could have been traded as a TL break with a 10pt SL (just).
  • It made a high above CBOL with a very strong 3Min Bolli setup.
  • The market then reversed right back to the lower compression TL, then straight through it to another retest of the gap.
  • When the reversal hit the upper compression TL a second time, buyers must have been ready because it accelerated dramatically off the level.
  • The high was 10910 – which was just above weekly R1.

How effective was my Neutral Zone? To be effective, the lower bounday should have been below the futures close rather below the previous day’s low. The upper level was correct as the first break to CBOL was reversed and the second went 90pts with a precise retest of the level.
How precise were my levels? RES 1 was the same as the upper level of the Neutral Zone and so the comments about that apply to this too. RES 2 saw a 15pt reaction, but weekly R1 20pts above was a much better level. None of the SUP levels were in play.

What I did

09:00 Sell x 89 @ 10746 | Opening spike | P&L = -1R
09:04 Sell x 97 @ 10764 | Fade 169 (M1) | P&L = -1R
09:10 Sell x 96 @ 10774 | Fade 169 (M1) | P&L = -1R
09:15 Sell x 87 @ 10771 | TL Break on M1 | P&L = -1R
09:18 Buy x 78 @ 10787 | TL Break on M1 | P&L = +2.8R
09:23 Sell x 79 @ 10792 | 3Min Bolli | P&L = -1R
09:23 Buy x 33 @ 10797 | TL Break on M15 or higher (EA) | P&L = -1R
09:23 Buy x 97 @ 10796 | Tl Break on M1 (EA) | P&L = -1R
09:35 Buy x 86 @ 10800| Mistake | P&L = 0R
09:38 Buy x 86 @ 10801 | TL Break on M1 | P&L = -1R
09:42 Buy x 85 @ 10793 | TL Break on M1 | P&L = -1R
09:42 Buy x 86 @ 10797 | Mistake | P&L = -0.3R
09:56 Sell x 83 @ 10797 | TL Break on M1 | P&L = -1R
10:03 Buy x 84 @ 10820| Mistake | P&L = -1R
10:11 Sell x 82 @ 10809 | L Break on M1 | P&L = +2.3R
10:14 Buy x 82 @ 10810 | Mistake | P&L = -1R
10:27 Sell x 81 @ 10811 | Retest of level on M1 | P&L = 3.1R
10:48 Buy x 91 @ 10786 | Fade 169 | P&L = -1R

10:25 to 11:22 8 more trades 6 of which were mistake….

TOTAL = -10.9R | # Trades 24 — Winners 3 — BE 1

There was such a crazy number of trades and I have gone over all the PA and what I did enough times to not have to add further pain here by typing in all entries and exits…..

Trades get classified as a ‘Mistake’ if I cannot find any possible reason to have taken the trades – if there is a reason bit it’s just a bad entry it’s classified as the setup.

Today’s most gorgeous setup

Buying the second visit to yesterday’s close. This was a 15R trade and there were four valid set ups to get into it.

This is how the trade setup on the 3Min chart. All the classic signs of a reversal or present.
This is the M1 chart of the reversal PA and shows how you could have used a triangle break to add to the trade.
Same PA showing the TL break entry to fade the level

For reference: 3 month cash chart at COB yesterday

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