Hi,
This post is for my own purpose. I do not recommend that you read it (please move along, now), as it is for experimental purposes only. I trade part-time and have a full-time career as a software developer. Others here give (far) better advice. I can manage my own risk, but I have no clue if you can do so for yourself. Understood?
Disclaimer: Any market recommendations are for me alone, and you are responsible for your own trading decisions, risk management, and losses. To clarify: This post does not contain any trading recommendations for you. It is for informational purposes only.
<img src="http://i.imgur.com/2c544Mi.png"><br>
Here, it appears that the Dow Transports are at *multi-decade* resistance. NQ e-mini's are at the top of a (possibly bearish) rising wedge on the short-term (daily, 4-hr, etc.) charts, and TF (Russell 2000 mini's) are also close to upper channel resistance around 1070 on the medium-term chart (daily, weekly, etc).
If we stay below these resistance lines, it could support a short view for a swing trade (or more, ideally, given that I want to see the world burn, as my girlfriend says).
Some thoughts: Playing counter-trend at the upper channel carries risks and other issues, such as these plays being lower probability.
If you rationalize this out, there really is only *one* top (barring double/triple/etc tops) in a given localized price series, and thus trying to pick that one top, in advance, multiple times, is a lower-probability play. Since you do not know in advance where that one top will occur, you are likely to have to take multiple attempts to 'get lucky'. This is likely a big part of why many of the more experienced members of ET seem to recommend against playing counter trend. Why not keep trying long until it is obviously no longer an uptrend? Sounds like good advice to me.
Having said that:
To me, the play here is to consider selling (short) at resistance in the form of a quick-fire event. The trade needs to work, and work right away, else you're out. Scratch it, or take the small loss, but either way, you are out if it does not do what you think (i.e. a touch-and-turn at resistance, or clear downside break of a slowing-down final-up-push below resistance). Someone in another thread pointed out that we could have parabolic upside here (likely meaning upon a break of these critical resistances that we are currently directly below). And, as a trader, I would like to be open to this view.
However, as a (very patient) kinda-perma-bear, I am willing to take shots within very tightly defined risk parameters. To me, where we are now is one of those areas, but I will *not* be blindly shorting now and simply placing stops above us. My strategy is to watch the price action and look for weakness of some kind, such as failure to make new highs, possibly forming some type of multi-touch tests upon an uptrend line such as the one on the /NQ chart, or some type of price action that indicates that the bulls are exhausted.
Repeat: I am a (very patient) kinda-perma-bear, meaning I carry an obvious short bias, and am therefore speculating on a prediction, not necessarily trading on 'what I see'. What I see is an uptrend, but I do 'see' resistance, and therefore am willing to pay up to see if my speculations might lead to a reversal at these levels. Don't do what I do, it works for me -- I can contain my risk and am willing to start with a tiny position (with minimal losses if wrong) and build it upon confirmation.
Good trading to all.
This post is for my own purpose. I do not recommend that you read it (please move along, now), as it is for experimental purposes only. I trade part-time and have a full-time career as a software developer. Others here give (far) better advice. I can manage my own risk, but I have no clue if you can do so for yourself. Understood?
Disclaimer: Any market recommendations are for me alone, and you are responsible for your own trading decisions, risk management, and losses. To clarify: This post does not contain any trading recommendations for you. It is for informational purposes only.
<img src="http://i.imgur.com/2c544Mi.png"><br>
Here, it appears that the Dow Transports are at *multi-decade* resistance. NQ e-mini's are at the top of a (possibly bearish) rising wedge on the short-term (daily, 4-hr, etc.) charts, and TF (Russell 2000 mini's) are also close to upper channel resistance around 1070 on the medium-term chart (daily, weekly, etc).
If we stay below these resistance lines, it could support a short view for a swing trade (or more, ideally, given that I want to see the world burn, as my girlfriend says).
Some thoughts: Playing counter-trend at the upper channel carries risks and other issues, such as these plays being lower probability.
If you rationalize this out, there really is only *one* top (barring double/triple/etc tops) in a given localized price series, and thus trying to pick that one top, in advance, multiple times, is a lower-probability play. Since you do not know in advance where that one top will occur, you are likely to have to take multiple attempts to 'get lucky'. This is likely a big part of why many of the more experienced members of ET seem to recommend against playing counter trend. Why not keep trying long until it is obviously no longer an uptrend? Sounds like good advice to me.
Having said that:
To me, the play here is to consider selling (short) at resistance in the form of a quick-fire event. The trade needs to work, and work right away, else you're out. Scratch it, or take the small loss, but either way, you are out if it does not do what you think (i.e. a touch-and-turn at resistance, or clear downside break of a slowing-down final-up-push below resistance). Someone in another thread pointed out that we could have parabolic upside here (likely meaning upon a break of these critical resistances that we are currently directly below). And, as a trader, I would like to be open to this view.
However, as a (very patient) kinda-perma-bear, I am willing to take shots within very tightly defined risk parameters. To me, where we are now is one of those areas, but I will *not* be blindly shorting now and simply placing stops above us. My strategy is to watch the price action and look for weakness of some kind, such as failure to make new highs, possibly forming some type of multi-touch tests upon an uptrend line such as the one on the /NQ chart, or some type of price action that indicates that the bulls are exhausted.
Repeat: I am a (very patient) kinda-perma-bear, meaning I carry an obvious short bias, and am therefore speculating on a prediction, not necessarily trading on 'what I see'. What I see is an uptrend, but I do 'see' resistance, and therefore am willing to pay up to see if my speculations might lead to a reversal at these levels. Don't do what I do, it works for me -- I can contain my risk and am willing to start with a tiny position (with minimal losses if wrong) and build it upon confirmation.
Good trading to all.