wow...cannot thank spd and nodoji enough...really thankful for your time and your charts!!!...lots to review and review...thanks for your time!!...learnin!
IncreaseNow's "Sell/Short" Futures Journal
- Thread starter increasenow
- Start date
ok...but...look at the 3 blue bars right before 11:30am...higher highs...what if I saw that and entered in long after the 3 higher high bars...would have got slammed as gold began to sink...please tell me what you saw here?
please expound on what you believe to be the importance of the 20 MA...how do you use it as a reference?
you place value on volume?...heard many say it does not matter...volume on a 5 minute chart...does it 'say anything'?
please loook at the little last red bar before 10am...wasn't that a sell signal?...obviously it did not happen...expound?
OK, if you went long AFTER those 3 bars, you are putting on a risky trade. You're fighting the short term trend, which is now down because of the lower high after the new high was put in just after 9:30 a.m.
You would be placing your stop below the pivot low and if another lower high is put in (which it is when price pulls back after the 3rd blue bar), there's a good chance a lower low will be put in next.
Now in this particular case, your stop would survive and you'd eventually enjoy the ride up to a new high. You might add a gray hair or two though when price fell back almost to your stop before finding support at a higher low.
By waiting a while and noticing that support seems to be holding up at a higher low, you get into your long at a good price and you now risk less with your stop. Look at the 7th bar after the 3 bars you refer to above. That's where buyers are now moving in with conviction (bullish engulfing candle completely overtakes the previous red bar) and you can join them. You get the added fuel of all the traders who shorted the first red bar after the 3 bars you refer to (because it meant another lower high was put in). Those shorts have placed their stops just under 1115.00, a few ticks above the pivot high. So when price hits their stops, they're buying to cover. And at that price the conservative longs are jumping in because of the break through previous resistance off a higher low.
See? You're letting the crowd carry you to profitability instead of fighting the market, or trading based on what YOU think price should do.
We now have an uptrend and until something proves otherwise, think continuation. The uptrend should continue unless something changes crowd sentiment. You have happy longs who've enjoyed a very nice ride up from the earlier double bottom. Some will take profits because of the power of the move up, bit many are sitting tight, knowing that a strong trend can just keep going all day with very shallow pullbacks.
So you see that little red bar before 10 a.m. and it's a VERY inviting counter-trend short because of the huge bear bar preceding it.
You have a choice: Short right there with your stop above the new high, or wait for further price action.
I personally, would've shorted just above 1117.00 because when the run pulled back and the sellers overtook the entire previous blue bar's action, I'm an aggressive counter-trend trader. I often counter-trend (picking a top or bottom) when the environment is "ripe" (3 pushes in a trend, a very strong run that stalls, etc) but I get in quick, so I can place a tight stop.
If you chose to wait, you sat through some more barb wire (wicky doji-type action) and then right around 11:00 when price failed to test the high, you short. You get a couple nice red bars, then a very strong hammer left behind. That hammer is a signal to exit at least part of your position, or move your initial stop to break even. Then that internal double bottom (slightly higher low actually) is the final signal to cover your short and go long.
Ok, personally I very well may have taken a short position at the close of that bar. As NoDoji stated its very inviting. As a counter trend trade my target would have been a retracement back to the 20ema. One thing that would have made me hesitant is that is very close to a spinning top. Dojis and spinning tops show me indecision and I dont like to enter trades on indecision.
Honsestly, if I was feeling agressive I probably would have entered that trade with a stop above the the big red bar. Most likely when price stalled and chopped around I would have exited with a small loss. Nothing about this is 100%. But when you have a defined system your risk is definined and you know when your reason for being in a trade has become invalid.
I'll get to your other questions tomorrow afternoon. BANG!
BANG!
