Trade #1:
Work up at 7am local time (7pm N.Y. time), and saw the gap down on ES 5min, and a long legged doji that clearly rejected 833. Also noticed a higher support at 833.5.
On the hourly, clusters of hammer and spinning top like candles have all closed above support at 834, the previous peak on the hourly. A support I trust enough to take a trade on the long side. The consolidation of prices after a series of strong bearish candles is telling of waning bearish momentum, at least for the time being.
Entered long after price has made a low higher than 833.5. Hadn't thought too much about entry price; focus was on where to put a protective stop.
My only rule for the trade was to get out on any unexpected movements on the 5min and 1hour. I expected price to test 833 support and to chop around until it breaks above 836.75. I also wanted to see very subtle higher lows. Was paying attention to candlestick patterns, and expected to see failure of bearish patterns (e.g. hanging men - which usually work only at extreme highs; the hammer on the other hand, is expected to work after any price decline).
ES indeed probed 833, went beneath it to touch 832.75 briefly and bounced back up, forming another long legged hammer that reinforced the 832-833 support. Didn't move my stop at 832. I figured if price were to get there, most sellers will see no reason to run.
Took profit at 840. It's a nice number.
What we have now is a very round bottom and the potential of it turning into a cup with handle is certainly high. But I'm no longer looking to buy. Will see how price react to 844.25. Should ES be stopped there, it could end up back at around 835.
On the hourly, clusters of hammer and spinning top like candles have all closed above support at 834, the previous peak on the hourly. A support I trust enough to take a trade on the long side. The consolidation of prices after a series of strong bearish candles is telling of waning bearish momentum, at least for the time being.
Entered long after price has made a low higher than 833.5. Hadn't thought too much about entry price; focus was on where to put a protective stop.
My only rule for the trade was to get out on any unexpected movements on the 5min and 1hour. I expected price to test 833 support and to chop around until it breaks above 836.75. I also wanted to see very subtle higher lows. Was paying attention to candlestick patterns, and expected to see failure of bearish patterns (e.g. hanging men - which usually work only at extreme highs; the hammer on the other hand, is expected to work after any price decline).
ES indeed probed 833, went beneath it to touch 832.75 briefly and bounced back up, forming another long legged hammer that reinforced the 832-833 support. Didn't move my stop at 832. I figured if price were to get there, most sellers will see no reason to run.
Took profit at 840. It's a nice number.
What we have now is a very round bottom and the potential of it turning into a cup with handle is certainly high. But I'm no longer looking to buy. Will see how price react to 844.25. Should ES be stopped there, it could end up back at around 835.
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