The YM trended well today and provided a few nice trade setups.  There were a few setups after the cash open and near 10am EST, but there was a report out at 10am so I decided to wait until after price settled down a little before  taking a setup.

12/05/07 YM Trades 

Trade 1 – After the 10am news, price settled above the 13374 daily support line and provided the first trade setup:

B 13392  X 13375  T1 13432  T2 13456  R 38  P1 40  P2 64  PT 104

This was a nice trade.  The YM was already up about 100 points and just kept going up hitting both targets.

Trade 2 – After exiting the first trade, the YM consolidated under the 13456 daily resistance area providing a trade setup:

B 13357  X 13342  T1 13477  T2 13493  R 30  P1 20  P2 36  PT 0

The YM tried to move up but stalled and consolidated in the 13456 SR area.  After a quick move down (probably shaking out stops) the YM made another attempt to move up and fell two ticks short of the 13477 resistance line (i.e. target 1).  Price started quickly moving down and I decided to move my stop to breakeven since the 13477 area was hit but I wasn’t quick enough to recognize that I should have taken off half my contracts.  Thus this trade ended up being breakeven.

A thing to note is that a divergence formed at the top during trade 2.  However divergences usually fail in strong trends (in fact a failure is a confirmation of a stong trend).  Therefore I did not trust the divergence and chose to ignore it as a trade setup.

Trade 3 – The YM made a good swing down and a LH before consolidating above the 13432 SR area.  This setup trade 3:

B 13440  X 13429  T1 13456  T2 13477  R 22  P1 16  P2 37  PT 16

The YM went straight towards the first target but not much farther.  It formed a LH and moved down very fast to form a LL.  The trend was now down.

Trade 4 – The YM stalled at the 13432 resistance line on it’s move back up forming a potential LH and a setup for trade 4:

S 13423  X 13438  T1 13374  T2 13330  R 30  P1 49  P2 93  PT -30

I had this fleeting thought that the YM would return to it’s open price.  It was not to be.  After a double bottom, it reversed back up and took out my stop.  I should know better than to take a short when the YM us up around 200 points.  In retrospec, it was a low probability trade.