Wow, what a tough day. I only saw one trade and had to wait all day for it. The market was bounded by the daily SR levels of 13962 and 14000. The price bars were too big for my risk tolerance and never really paused and consolidated around one of the SR levels to setup a trade. It was almost 3pm before the first tradeable setup occured. Here’s a picture of today’s chart:
Area A – The area marked with an A was at the opening. The market was in an uptrend until the market opened and traded below the previous swing low. ‘A’ could have been a short trade setup, but the risk of 28 points per contract was way to big for my liking.
Area B – The market bounced nicely off the 13962 daily SR and paused. The trend was still down, so any trade would be a break down which never happened. If there was a movement down, this potential trade would also have too much risk for me.
Area C – The market moved up to almost touch 14000 providing an opportunity for a short. However once again the bars were too big creating a risk of over 20 points per contract.
Area D – The market is consolidating around the 13962 SR, still in a down trend. A break down could be a valid trade (which the market did do), however this trade had 20+ points risk per contract.
Trade 1 – Just before 3pm, the market came down and touched the 13962 SR, creating a hangman candle. If this was a swing bottom, it was a higher low after a higher high and the trend would now be up. This is the trade:
B 13972 X13959 T1 14000 T2 14023
This trade risked 26 points (13 x 2) for a potential of 74 points (T1=23 + T2=51). Where did T2 come from? Since T2 was above my daily SRs, I did a Fibonacci projection based on the swing before trade entry. I chose the 161.8% projection for my second target.
Within half an hour T1 was hit. The market backed off and started heading back to 14000 near the close. T2 was moved to 14000 near the close and was hit. The trade gross was 46 YM points for 2 contracts.