Yesterday played out precisely:- rising up from support and completing the move into resistance levels. That patten of retesting resistance along with the price action in US markets now sets up for further moves down.
Tuesday:- trend guide 3618.
My ideal pattern for today if it's going to continue down would be to see a 22 point rise on open close the gap and then continue down below 3618 towards the 5-day lows.
As you can see two different patterns:- yesterday I wanted to see a 22-27 point down move into support and then trade UP, as I was looking for price to move towards the Weekly 50% level.
Today I want to see the opposite, but still define Tuesday's trend by trading either side of 3618 and understanding where price is likely to go in the 5-day range, as part of the bigger picture"
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SPI Weekly and 5-day pattern
Early morning price action played out precisely moving up 22 points and reversing down completing 43 points.
Even though I have a view of the SPI moving down towards the Weekly lows @ 3470, once the R44 'HOOKed' back above 3618 the continuation into the 5-day lows @ 3560 downward was open to risk.
When trading the SPI focus on exiting around 40-44 points around
the previous swing high or swing low.
If you notice a lot of the movements extend outward and reverse
inward based on this range.
Even though the SPI has an ATR around 80points and can travel up to
200 points in 1 day, around 70% of the time the SPI moves around 50%
level of the ATR each day.
The only reason why it has an 80 point ATR or more, is because there
is usually 1 large trending day within the week that keeps the True
range around its average.
Therefore as a day-trader you want to be exiting or getting out of
the market once price moves towards completing the range.
If you want to trade against the trend the best trades always occur at
those extremes or those 44 point range highs or lows, and you can
make money trading against the trend at those points (spiral points), but
if it’s not matched with a 5-day level :- support or resistance then
profits are smaller:- focus on 10-20 points.
The point of a day-trader is taking chunks out of the ranges so that
you obtain an income, so we need to trade with and use the
statistical patterns that continually occur in the market:-
Work with the patterns that continually appear in a systematic
way and understand how the market actually function.
When is the best time to hold for those large trend days?
It’s always around the Monthly midpoints or Monthly extremes, and
today that’s not the case so we take the money and run.
If I wanted to go long today then I didn’t have any 5-day support,
but would have traded above 3606 to trade the R44 completion
upwards.
Because of the 5-day filter @ 3618, then I probably wouldn't have traded longs...
However, based on the 5-day filter:- Above 3618 and there is a bias for further gains into the close simply based on the ‘HOOK' pattern above 3618.
A 'HOOK' pattern verifies any reversal or Breakout by the closing bar
either side of support or resistance.
On most occassions the bar will restest the same level and as a trader
you want to enter at those levels and trade with the movement of the
bar away from the 5-day level.
There is no resistance until price is around 3685. It doesn't mean it will
travel that far today, but the probability of a HOOK pattern above 3618 has
to potential to complete another 40-44 points upwards:- 3660
The movement is random above 3618 but as I always do focus on taking a partial
exit and hold with breakeven stops, as price continued upward 22 points.
That price action needs to be taken in context with the trading day, if that HOOK bar over 3618 occured earlier then a move towards 3660 and higher was a high probability pattern.
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