Anticipating A Day Trade

Anticipating A Day Trade

I always like to be anticipating a day trade.  Usually, anticipating a day trade is easiest early in the US morning session.  It is a major reason to create a game plan the night before.  In last night’s post, I indicated that the S&Ps (ES) were likely oversold by yesterday’s strong downside action.  We could therefore anticipate a rally or pullback.  I marked the 2113 level as a good target, based on market structure.  I was hoping the market would get a little more oversold by going underneath yesterday’s low this morning, but the markets don’t usually comply exactly with my wishes. That’s really no matter.

Anticipating A Day Trade: The Context

Anticipating a Day TradeComing into the US morning session, the first thing to notice was that the S&Ps had moved up off the lows of yesterday.  The idea of buying a weak dip underneath yesterday’s low for the first trade of the day was immediately nixed.

Two other things were noteworthy: First, there was little supply seen on reactions since the lows were made yesterday.  Second, the market made a higher high (B) over yesterday afternoon’s swing high (A).  In the backdrop of being oversold, this context suggested higher prices this morning.

Anticipating a Day trade: The Setup & Exit

The reaction back to C drew downside volume, but the volume didn’t produce a new low.  Instead, price held the demand line and gave clear price bar behavior it would rally.  A few minutes later, it tested the trend line and drew no supply with more confirming bullish price action.  Either location offered long trade initiation.

As anticipated last night, the 2113 level was a reasonable target for a nice day trade.

S&P e-Mini Market Analysis: Where Are We?

S&P e-Mini Market Analysis

Every S&P e-mini market analysis is asking the same question: Where are we?

If you are a bull, you would have to say, “We are in a good place.”  Last week, we broke to new highs (2134 via the June S&P e-mini contract) and held those gains during the week.

If you are a bear, you might also be saying, “We are in a good place,” because although we did break into new high ground, there has been no follow through all week.  Prices could head lower.

Isn’t this always the way?  We often seem to be able to make rational claims for both sides of the argument.  Well, let’s not bicker with ourselves.  And let’s be neither a bull nor a bear.  Let’s just get down to the facts and be prepared for whichever way the market wants to trade.

S&P e-Mini Market Analysis: Details

S&P e-mini Market AnalysisAs is always the case in S&P e-mini market analysis, the details reveal the market’s next likely moves.

To do a thorough S&P e-mini market analysis, I like to keep a daily chart alongside a 4-hour chart (240-minute chart) annotated with market structure, wave movement and key levels of support and resistance—both obvious and not so obvious.

A good run up began on May 7th labeled A on the chart.  It started with strong movement up and, although we had a sizable initial reaction from that first rally, the rally kept on going to last week’s high at B.  A nice run.

Notice, however, the rallies became shorter as the market moved higher.  I pointed this out on Tuesday night after the market made its new high in my Deep Practice Program—our weekly trading group where we learn and practice deep chart reading and psychological skills.  We discussed how the market was likely going to pull back to the 2113.50 support, and maybe go lower if good quality selling came into the market.  We went to 2115, found support, and then had a Wyckoff Spring of Wednesday’s low.

Okay, so now where are we?  Well, the market rallied up off the spring as expected, but couldn’t make new highs as there was just no fuel (volume) to take it higher.  On Friday, the market just went sideways and closed down, again on low volume.

S&P e-Mini Market Analysis: What I Anticipate for Early Next Week

I note that the rally volume on the Weis Wave has been diminishing with each progressive rally.  Buyers may be tiring; they are certainly showing a lack of energy in pushing prices higher.  Consistent with this, each push up has seen the market travel up less and less.  What hasn’t been seen yet, however, is supply.  Buyers have weakened, but sellers have not stepped in, at least yet.

The market closed Friday sitting just above the 2122.75 level.  We could see the market hold here, or a little lower, and begin driving higher back on up to the 2134 area.  To see this occur, we will need to have decent upside volume come into the market to fuel the rally.

Maybe more likely, is to see a weak rally reaching around 2130 and unable to push above the congestion around Friday’s high to trigger a sale.  Should that occur, I would anticipate the market revisiting the 2113 level, and perhaps go down lower into the hidden support of the 2106 area.  Should we close poorly (below 2113) and do so on an increase in downside volume, then we are likely to see a greater downside push as the days go by.

Deep Practice to Develop S&P e-Mini Market Analysis

For those who may be interested: You can join our weekly Deep Practice Program where we spend 90 minutes each week walking through and trading various markets with traders from all over the globe.  We assess market context, make a game plan and take, manage and exit trades.  We alternate between swing and intraday trading.

Practice can make perfect when done correctly.  Deep Practice is designed to give the trader true chart reading and mental skills based on over 40 years of psychological research into what actually makes great performers great.  If you are interested in developing your ability to read the market and do so with mental clarity, then you can learn more about my Deep Practice Program here: Deep Practice 

Trading Crude Oil

Trading Crude Oil is getting better and better, especially when we apply Wyckoff and VSA principles.  Here is a three-part look at the last full trading day of last week—Thursday–trading crude oil.  We are trading the crude oil futures contract.

Trading Crude Oil-Part 1

Trading Crude OilA sell-off in the overnight market stabilized and we had a rally just prior to the open of the US session.  The market held its gains and gave us a Wyckoff Spring and then light volume tests for a nice trade to the top of the trend channel.

We could have ended the day trading crude oil at this point, but there was more activity in this market.

Trading Crude Oil-Part 2

Trading Crude OilAfter the first hour of the US session, crude oil began trading lower.  We see the tell-tale signs of supply entering and short opportunities emerge on hidden upthrusts.  These setups traded to the lower end of the trend channel.

Trading Crude Oil-Part 3

Trading Crude OilFor anyone still interested in trading crude oil on Thursday, we have two additional trades to the short side and two additional trades to the long side.  A hidden upthrust and a top reversal market the end of weak rallies for two solid short trades.  Two nice Wyckoff Springs (the first with a 2-bar bottom reversal) gave the late-day trader two high odds opportunities for long trades.

Trading crude oil off of the intraday 750-tick chart with the Weis Wave and classic Wyckoff and VSA principles is a great way to trade this market as seen by the ample opportunities on this day.

Currency Market Volatility – Wow!

Currency Market Volatility

Currency Market VolatilityCurrency market volatility gave quite a shock this week.  The huge expansion in volatility across the currency market caught many hedge funds and larger operators flat-footed.  Many were positioned in the currency market or had trades closely tied to it and had to scramble to get out of positions due to the substantial increase in volatility this week according to the Wall Street Journal.

Could we have seen the currency market about to become highly volatile before it happened? Well, I don’t know about that, but we could see that a pullback of some degree was likely.  I discuss the currency market volatility in this week’s video blog, and why the downdraft was so large (hint: it has to do with the hedge funds).  I also walk through a Wyckoff analysis of the US Dollar futures (DX) and give a trading few ideas regarding currency market volatility.

 

Tick vs Time Charts & Free Webinar

Free Webinar Info Used to Earn 16 Points!

The Free Webinar we held yesterday had much useful information about trading by price and volume, including tick vs time charts.  Fifteen different trade setups across five different markets were detailed in this 50-minute presentation.  This morning, one trader wrote to say,

I can’t believe how good the content is.  The info regarding tick vs time charts was pure gold.  I took a trade in the ES this morning based off what you taught yesterday and made 16 points profit!  Wow!

For those of you who registered and missed yesterday’s presentation, you can still access it at the link provided.  For those of you who didn’t register … well, OK, you can still sign-up and get the content.  Here is the link: Free Webinar Wyckoff Principles

Tick vs Time Charts

Several traders asked about why I use tick vs time charts in my intraday trading.  Pros understand the value of tick vs time charts; most novice traders don’t.  Tick charts build bars based off the number of trades that take place (called ticks).  You set the amount of trades or ticks for the bar (for example, 3000 ticks in the ES).  One thing this does is make the overnight data much more readable, especially when combined with the Weis Wave for volume. The chart shows an example.

Tick vs Time ChartsHere we see a standard, 5-minute bar chart of Crude oil and alongside this, a 750 tick chart.  The vertical red dashed line on both charts represents the beginning of the trading session. Note the 5-minute chart is drawn out with small price bars, lots of gaps and numerous spikes.  It’s difficult to read.  The tick chart, on the other hand, compresses the same data into a readable form.  At A, the 5-minute chart looks threatening.  We see large bars down and heavy volume.  It’s hard to justify a long trade here, but that is what was called for.  The tick chart shows this as a non-threatening pullback and, indeed, a nice Wyckoff Spring.  Note the volume and compare with the 5-minute chart.  See the difference between tick vs time charts?  It should be jumping out at you.

Major Sale & 30% Discount

In honor of Black Friday and to celebrate our new website, we have put all of our video tutorial on sale.  You can enjoy a 30% saving off the listed price by using the coupon NewWebsite30 at checkout.  The 30% discount may be applied to both trading courses and trading psychology courses.