Hmmm what a week… This week has been a culmination of many things for me trading wise.
Went short on Wednesday with loose stops and closed out Friday night. All in all I only netted 150 points from the XJO/SPI.. however this was one of my better trades due to a number of reasons.
Confidence… when I initially put the trade on, I was confidant enough with my methodology that I could let relatively looses stops ride, confidant that I was willing to risk losing based on the potential rewards, and blow me down with a feather, confidant ‘cos I finally have ONE trade entry and exit system which I am happy with.
I have been trading a lot, indices and FOREX, this week. The scales have dropped from my eyes and risk is finally a beast I can handle.
Maybe 50 percent of my trades have netted me money so plenty of times when I got stopped out. Of most importance though is despite numerous stop outs, a number of “perfect” scalps have ensued and as stated one nice winner on the SPI. So all up a calmly (most times, lol) profitable week, and I believe the way it should be.
All of this is thanks to being able to define a low risk entry, though I must confess there is a veritable truckload of stuff that has gone into defining said entry. Other stuff, targeting, running multi contracts and taking profits without fully closing a positive position, and religiously letting myself be stopped out when the entry “failed” at the same time being willing to let a position hang in a negative state above a stop and letting it “breathe”have also been handy
The crux of my trading entry method is based on the MACD which I’ve spraffed on about ad nauseum, and will know doubt spraff on some more given the time.
I pretty well defined it last week in the waffle then, but here it is again.. with a FOREX example I used last week
The setup is as follows: Low on price (First Elipse on price near Red Verticle line) followed by a lower low (Second ellipse on price) with a higher low on the macd moving averages (Observe ellipses on the MACD). Price then pierces the 21 MA, closes above and retests then takes off (around the red arrow area).
The target is based on the red line cross hairs, and is determined by drawing a vertical line up from the most extreme close by Histogram clusters on the MACD, and looking for the closest congestion on price to that line. Target is just below this congestion.
On this particular trade (5 minute chart by the way) it is a fine example and an hour or so later it did hit that target… Here it is almost there:
Believe it or not I can show multi multi multiple instances of this scenario ocurring on multiple timespans and multiple instruments.
BUT!!!!!!!!!
I can also show you quite a few examples when the first second or even third attempt might fail.. check the Hourly chart in the following report where the first higher high on the MACD averages failed miserablely as far as a targetable entry.
And that is where the stops come in.. stop JUST below the lowest low of the time… not to be moved or you get a SMACK ON THE HEAD!!! Lol.
Of worthwhileness as far as making the chances of getting on a good move early, IF the market is fast and liquid.. pop down to the 1 minute, as often enough the same setup will already have occurred and can be “got On” earlier… one minute though can be bloody noisy though stops can be tighter and more likely to be hit.
Anyways… not wanting to wreck all yer heads too soon before the report.. here’s the nitty gritty waffle for this week:..
Enjoy:
Top down technical analysis of the XJO Futures This is a weekly report prepared by Winkinatcha. Observations from recent Price History This section shows how the last week’s price movement appears when presented on charts in various time frames.
As unbiased as possible, technical observations are made.
On the charts I use a number of indicators, both on price itself (simple moving averages (200 period, 21 period and 13 period)) and as separate indicators (a simple MACD including moving averages and histograms., and a simple stochastic oscillator).
I count waves and occasionally use more esoteric stuff if I see something interesting and worth commenting on..
Monthly
Observations Price has now cleared the 21 period moving average. Note that on lower timespans each time price has performed this act of crossing the 21 MA it has resulted in a sustained up move. Can it happen here as well?
The 21 period moving average will now act as a support area.
Note how the first test of the 38.2% retrace (thin horizontal line) appears to have been rejected, though still early days yet.
Note also the neat two point up sloping red trendline.
Weekly WeeklyXJOFutures Observations Price has satisfied the “requirements” for a three wave up move after a 5 wave down… “Satisfaction” being provided by the completion of an equal price move up in the third wave as for the first. The “equal third wave” level is shown by the dashed horizontal line. MACD The MACD moving averages are showing minor signs of weakening after an almost parallel rise of the slow (red) and fast/signal (blue) since they crossed the zero line. There is ever so slight divergence on the histograms with a minor decline over the past few weeks. No divergence on the MACD moving averages. Stochastic Current pattern is getting interesting for hinting towards downside. Note the time taken between the first crossover into overbought, and the nadir of the first dip in mid july is roughly the same as that point mid dip and now. Also note a strong crossover of the fast line has occurred over the slow, potentially hinting at further downside.
Daily DailyXJOFutures
Observations The dashed horizontal line on price shows the projected level for a three wave up, and price may have rejected this level.
MACD Last Week: We have the barest of crossovers of the signal line down over the slow line on the macd MAVS. A potential sell, for this timespan.
This week.. that crossover is confirmed.. somewhat.. There is plenty of room to the downside for this signal, with the Zero Line being the potential first stop.
Stochastic Last week… Of great interest here is the following “Stochastic Dome”:
“Lower time spans these domes, whether inverted like this one or round the other way generally herald a Rapid change of direction or opposite move of price. Price tends to recover or slow down fairly quick once the stochastic gets into the opposite area
Certainly did see a rapid move down on the stochastic last week.
Hourly
Current Observations Strong “impulsive” expansion move to the downside. Impulsive… no discernible waves…suggests that movement to the downside is currently “easy” and the move itself may be regarded as the first of three or five… Quick spike down to touch support area of 38.2 percent fib retrace of the entire drop. The spike itself is interesting as spikes often indicate a change of sentiment and possible halting or satisfaction of current move. As yet price has not pierced and held the 21MA from the underside so upside on this timespan not yet confirmed as tradeable.. MACD Note for future reference the strong divergence on Peaks in price versus the peaks on the MACD moving averages specifically with the third “fakout” slightly higher peak on the MMACD mavs.
Stochastic Slightly wobbly but apparent stochastic dome suggesting bounce may continue upside for a while..
Ten Minutes TenMinutesXJOFutures
Although trying to predict movement on a lower timespan coming in to the end of the week is fraught with foolishness, there are a couple of hints to the upside occurring here.
Hint number one.. That thin horizontal line at the bottom of the price section of the chart si a pretty standard Long setup, with entry occurring around 4560 on a crossover of the 21 MA on price. Zooming in a bit on this:
We can see we have two lower lows on price and higher lows on the MACD moving averages at the same time.
The bottom spike down basically tested from the upside the 38.2 fib retracement of the major decline that price absolutely creamed through on the way up. This could now be acting as support.
Gap on price where the two blue horizontal lines reside on the price chart.
Caveat on the gap… I believe that gaps can come into play on indices in the same manner they come in to play in stocks… as such, not every gap is one you want to trade based on itt closing any time soon. Specifically gaps can occur very near the beginning of a concerted up trend or downtrend. We had a similar gap around the march lows on the way up and trading for that to fill would not have been too smart, Likewise, we still have a gap higher up at the start of the dramatic fall at the beginning of this year, and trading for that to fill would also have been quite painful, during the drop down.. Although I have been doing a bit of study into gaps of late I can’t for the life of me remember off the top of my head what these gaps are called, but they are a sign that momentum has reached break neck speed after a turn…Could this be one of those babies? Maybe…
Executive summary Monthly The last week’s action saw a retrace back to the 38.2% fib. Support? The 21 MA is still below price, and a retest after first ppiercing is not impossible on this timespan. Weekly Upside This timespan for this period does not give too many clses to the upside at this time. Previous upside targets around 5000 and 5400 still apply..
Downside A “satisfied” three wave up could now be undergoing correction/retrace. Note… 3wave structures can be completely retraced.
Some weakness sowing in the signal Line of the MACD Moving Averages. Some weakness now showing in the stochastics with the fast line crossing down over the slow line. If the Stochastic is viewed as a “cycle hinter” then time-wise it could be hinting at the start of a down cycle on this timespan.
The 13Ma is approx 200+ points below price and the21 MA is 400 odd points below. A testing of these two levels would not be unexpected.
A two point Trendline as drawn on the monthly could see price dropping down to somewhere between the 21Ma and 13 MA before finding support from this trendline.
Downside targets potentially range from 400 points thru to 800 points through to a complete retrace and retest of the march lows… little bit of a way off yet. Daily Upside Potential retest of the 21MA from the underside could occur. location of the stochastic near the 50% level could provide some momentum support. Gap at the 21MA which may be filled. Downside A failure of the signal line on the MACD moving averages, a break of histograms to begin forming a negative cluster, a break of the 21 Moving average and a close below it, an as yet uncompleted move from over bought to oversold on the stochastic… All suggesting a downside move has started. .
Intraday Hourly Fairly indeterminant at this time. The spike downwards followed by a quick retrace could hint at further upside.
10 minutes Predictions in this time span are dangerous after week’s close and when the “market” has had time to digest the previous weeks move prior to resuming battle on Monday. TA strong spike down and retrace, and an entry signal from price coming off the resultant low could suggest further short term upside, including a gap fill. Conclusion Long Term Upside targets potentially being in the next month or two have not yet been negated.
Intraday timespans suggest 60 points of upside could easily be available, enabling price to gap fill.
The strength of this initial down move on the daily and hourly timespan suggest it has not reached its lows yet, however, shorting the hole at this stage is not the wisest course of action and intraday timespans are hinting that at least some short term upside could be in the offing.
Personally I closed my short trade too early but still managed to net around 150 points. I have a “bad Habit” of picking turns and then jumping off too quick at the first signs of retrace. I think it is possible that I have done the same here, and I am looking for potential places to short, specifically around the gap area as shoen on the hourly, which corresponds to the underside of the 21MA on the daily. Intraday upside hints will see me ready to try to scalp, initially long, ‘til the market makes up its mind.
The usual gaps on market open Monday will provide some clues, no doubt. Safe trading all y’all
(20min delay)