Quote from Matcha:
You probably wonder why did I enter the pullback at 7:15pst. I was too concerned to buy the middle of the range at that time... and its not the best ABC wave pullback I am trading. But it ended to be the best trade of the day. Sooner or later, I will take trades at the open that might not have the "best looking". It's the other "edge" I am trying to study.
The early moves are usually the best of the day, but you need a pre-open plan to take advantage of them.
When I fire up my platform in the morning and look at the 6 hours or so leading into the hard right edge at that moment in time, I make all my initial notes:
Minor S/R levels off the 5-min chart pivots
S/R levels off the 60-min chart (60-min bar highs/lows)
S/R levels off the daily chart
I note whether price has trended or ranged in that previous 6 hours, and where in the trend or range price is right now.
I then note previous resistance points that can become support in an uptrend and previous support zones that can become resistance in a down trend.
Once I have all that in writing in front of me, I look for levels that will position me long or short depending on the trend or the range in play.
When I scroll my ES chart to the hard right edge now, displaying the 6 hour period leading into the market open, I see that following a nice move up out of consolidation, price has again consolidated in about a 3-point range between 1334.50 and 1337.50. 1337.50 is a double top, begging for a breakout when price consolidates in such a narrow range. ES breakouts sometimes be strong, but for the most part ES breaks out a little, then pulls back and once support holds, the real breakout occurs.
With all this in mind, my trading plan for the open would be to buy inside 1334.50 (ES is notorious for taking forever to fill at a level, so by placing an order 1 tick inside the range low of 1334.50, I would expect a better chance of the order getting lifted). Since this is an anticipatory order in which I expect support to hold, I'd place my stop loss @ 1334.00 and, in fact, consider looking for a short entry if the stop is hit and price then leaves a lower high behind.
The last couple of new highs made in the uptrend before the strong pullback in March moved between 9 and 11 points through previous consolidation highs, so my target zone on this trade would be around 9 points from the double top high of 1337.75.
This is an anticipatory trade, which is scary because price has to fall before you buy, but the tradeoff is a tight stop loss. Bighog walked me through these kinds of trades and it took me a while to get my head around it, but when a level holds, it just plain holds and you're positioned about as ideally as possible.
If you prefer a more confirmed entry, you can let the opening action unfold, watch for a breakout or a failure, then buy or sell a pullback off the opening move.
Today there was key news at 10:00am ET, which you would have to choose whether to hold or not if positioned in advance of it. If long @ 1334.75 off the open, I would likely have held the position into the news because of the 2 point profit cushion. On the other hand, knowing me, I would've also very likely locked in 3 points on the breakout, expecting some power behind it. Then I'd be watching for a sign of support very close to previous support and would buy a close above the 20 EMA for a retest of the breakout level.
Let's say the weak breakout on news resulted in a failure and price took out your stop or stopped you out break even. You then re-evaluate the price action to see if it's just a shakeout and the 1330's still hold up, or if a lower high is put in and a short entry is indicated.
Matcha, I think doing a pre-trade plan like this, you'll find trading closer to the open to be more comfortable. Mid-day mush can be very frustrating to trade, especially ES.
