Trading NQ via Price Action

Ok.... I cheated a bit on this one. Had to hunt down Db's posting to see what the heck is going on. I discounted the upper channel because I thought it was just too narrow. These channels are usually much larger and this one looked mini in comparison. Furthermore, it broke out the bottom yesterday, proving the validity of our down slopping longer term channel. No reason I guess why you can't have a channel that tracks price on the way up to the upper line of a longer term down channel.

So I have it drawn in. Price yesterday was oversold in relation to this channel, and the bout of good news really pushed price up after the close and overnight.

So this is where we are at. We are very close to the upper line, which is at about 3620. If fact, we may have already bounced off at 3618. If we continue up and out of the channel, 3637 and 3657 are two levels to watch. First comes from an area of previous activity, second comes from a previous top. There really is quite a bit of airspace above us so if the LOLR is up, we can go up quite a bit.

Of course if we are bouncing off the upper line of this small up channel, then down to the mean at 3597 or the lower level at 3574. 3600 was an important price level that was breached earlier, so not sure how price would behave here. There really are lots of levels on the way down to halt price.

As it is right now, the REV at 3618 is quite pronounced, so according to AMT, we really should be heading down, but we can't ignore the fact that we have a strong trend up at the moment.
 
Ok... lets just get this over with quick.

Prep outlined the possibilities, yet they were not acted on.

B - During the actual prep work in the pre-market, this trade came up. Hard to see on this chart here since its compressed because of the big drop, but its one point below the crest. The run up to 3618 and rejection (shown at A) is just so obvious. By B here, the attempt to rally up to test it was unsuccessful. So getting to within 2 points of the UL of the channel, failed attempt to match it, this is all good reason for the short.

C - 5 minutes before the open this opportunity came up again. We moved up a bit before this, but no reason why our thinking we should be in short is wrong. So we just keep trailing our entry below the crest and we could be filled at roughly 3610. This trade works almost instantly and doesn't look back.

D - The low here of 55 is a level I had on my chart, but its from a few days ago and not that major, the mean of an overnight range.

E - Here I think what would happen if I tried for a short, breaking the previous low of 55, thinking that this rally is just a depper RET. It does work, but moves against me more than 2 points before it ultimately works, so I would have scratched for sure.

F - Our ultimate low is just below 45. Would you know it, this is the low of yesterday. Its perhaps not obvious until 5 or 10 points higher, but even if entered late, this REV trade is still quite profitable.

So to review, I didn't do, again, what I outlined. In my prep, the last sentence states that according to AMT we should be heading down, but I didn't act on it. I wouldn't even say it was a fear thing, although obviously if I knew the trade was 100% I would have taken it.

As it is, I can't trade for the next few days, so perhaps I had that on my mind. I wanted to end the week off well, perhaps scared to end the week off not well, and hence set up expectations. No point in doing mental analysis though. What I got from today was further confirmation of my prep being good enough (although I did get help on that channel), and the "sim" trades were for the most part quite decent indeed.

Throwing in an hourly chart as well. It looks a bit messy with the two down-slopping channels and means, one being the one from early march, and one being a steeper one. Its nice to see the big picture.
 
So after a little mini vacation, its time to get back to work.

I feel a little lost at the moment, and by that I mean that I haven't looked at exactly what price has been doing over the past few days. This is actually a good thing because I am getting very well in tune with trying to figure out what price is telling me.

For the last few trading sessions I have felt quite good about analyzing the the daily and hourly charts, in addition to the overnight market, and outlining what I will do when the market opens and where.

So for now, I am just going to review the past few days, get some sleep, see what happened over night, and get myself ready for the open tomorrow morning.
 
Things aren't all that clear this morning. I notice that my March channel doesn't quite line up with what Db is posting since my UL is a bit lower, and at the moment, price is above it. The shorter term channel is shown in red, but I know that we shouldn't place too much importance to these as they are broken often.

Overnight, we see a clear top just above 3585 with some lower highs so we are able to draw a SL. Overnight highs and lows of 3585.75 and 72.75 are shown along with the mean at roughly 79.50.

Considering that we are just above the UL of the March TC (and according to Db we just bounced off), and considering the overnight high and subsequent lower highs, the LOLR is down. But I will say that the price action over the past few days doesn't jump out me as much as the days prior to leaving for a few days so I will have to keep my eyes open.
 
So lets jump into it. No live trades today, just trying to get into the groove again. Carefully following what Db is posting still until I can fly on my own.

A - Right about here is where Db said the SL is holding and its another opportunity for a short, so lets just mark it in and track it.

B - Here I mark in another short op. Lets also note the small range of the past hour with green lines, which is 78 to 80. This was done after the initial prep, but before the open I believe, could have even been mentioned in chat. What's interesting is that the mean of this would be 79, which lines up well with the mean that was already established from ON. I like it when there are multiple confirmations. As you can tell, I have issues, want to be right, want more information and more confirmation. This comes at the cost of price.

When I'm not thinking about money, the trades I call seem quite good indeed, and the price to get in is a great price that leads to lots of breathing room as the trade slowly works or even comes back to you initially. A worse price leads to scratches even if the initial trade was correct and eventually goes in your favor.

C - So of course taking the short at B is problematic because I say to myself that we need to clear the low of this range at 78. If we wait for that and short at 77.50 or so, we might not get filled as it was a quick drop.

D - We melt through the overnight low, but not by much. In real time, the down move seems strong, I am expecting down as the LOLR, so the rally back up is hard to see.

E - We break the SL that Db pointed out on our way to E, but we stop just above the overnight high. Now here is what is interesting. Look at how symmetrical the pokes above and below the overnight levels at D and E are. At this point, price really seems to be saying its in a range with a mean of 79.

F - The mean holds up here, but trading at the mean is of course difficult because you don't know if you will go through it to the bottom, or back up to the top, or just consolidate around the mean.

G - We have multiple instances of price breaking through the ON range, but not being able to breach the highs at E.

H - A visit back to the mean, and then through the mean brings us down to the lower level. Trading the range with REVs could lead to good profits today.

I'm getting quite sleepy here but before I leave this, for this journal to be successful, I have to analyze if I did what I said I would do and figure out what to learn from this.

So I was a bit hazy as to where price was, but the LOLR was down, so looking for shorts. The one that Db mentioned at A, the one I followed at B, even the one at C would have followed my plan and been quite good. Maybe a few points profit could have been taken if I saw the clear rejection just below the low of the overnight range and gotten out.

By the time we have a REJ at E, a range is looking very likely, so getting into trading ranges with REVs is called for. The extremes of this range are the juicy areas, but we mostly just get to the mean. Of course if I shorted at E or G, and held till H, as per the range that was well outlined in advance, the profit was there for the taking.

I need to figure out a way to trust my prep and trade it.
 
This morning we have a tight range from overnight, between 85 and 91, with a mean of 88. According to my hourly chart, we are still above the UL of the March trend channel, and using Db's which was about 3590 yesterday, we are probably just slightly above today as well.

Hovering around 88 right now is also 50% of the move from 3570 to 3605 yesterday, and it also looks a bit like a hinge, so the apex would be at about this same level.

The action is so tight from overnight, perhaps all traders waiting for the job report this morning. LOLR is still down, but since we have such a tight range, and we are at the apex of the hinge or middle of yesterday's move up, a break up or down is what I am looking for.
 
Analyzing the 15 second chart for the jobs report real quickly here.

Price jumped up on what was good news it seems. Stops just above 3604, forming a double top with the high of yesterday. A few minutes of action creates a hinge, which breaks out the bottom and a short op. (first red down arrow). Price forms a lower high, second arrow for another short op, and yet another lower high. Curiously though, the poke below 88 is a rejection, and this is tested on the next trip down to 88. After this, the SL, if drawn in, would have been broken, which then setups up a long.
 
So here is a follow up to the morning prep after the jobs action.

It hit a top of 3604 but no buyers to push it higher. Dropping down to 88, the mean of the overnight, brings in buyers, so its providing support. 3605 forms a double top with yesterday's high, so we really need to clear that if buying is in the cards, and dropping below 3588 seems like a sensible area to wait for if looking for a short.
 
Sigh... no trades today, so just posting the thought process.

A - Seeing the DT that forms above A, this seems like a good area for a short, which ultimately fails.

B - Rejection here, perhaps as a result of the mean of 88 as outlined in prep?

C - Another rejection here, but the bars overlap quite a bit so it isn't that apparent until we hit the mean of the hinge perhaps.

D - This would be a great area for a short. We had the REJ at C, we fail to go above the mean of the hinge, so a short here seems appropriate. When filled two bars later, it works beautifully and price doesn't come back.

Of course this isn't as per the plan which was outlined to look for trades above and below 3605 and 3588. The other problem is that I didn't actually take this trade because I see the rejection at B, I see the higher low just before D, so shorting here seems problematic in real time. I can see over and over again that I talk myself out of trades based on previous action. This is clearly detrimental. Looking at where price has been is important, but this shouldn't prevent me from trading in a certain direction just because price couldn't clear a previous swing high or low. The benefit of shorting at D is outlined by the problems of shorting at E and F as discussed below.

E - Once we drop below the mean, I see a RET on the 15 sec and think to go short here. Price does although come back up, above the mean, would move more than 2 points against me, so if trading real money, I think I would have scratched.

F - Trying to short again here, seeing a RET on the one minute chart, price does move against me here as well, a tick shy of 2 points. This highlights the benefit of shorting at D. Yes its within the range to short at D, but the short is taken at a much better price and all this business of having to give price room isn't as troublesome, which you have to do at E and F.

G - We hit a low of 78, just below the mean from yesterday at 79. This also appears to be the LL of the channel outlined in prep, the red one, albeit the short term channel.

H - This trade here is unfortunately not one I saw until way later. Seeing this made me actually draw in the first SL that gets broken, and then the DL. I am trying to move away from drawing these as per Db, but here it clearly sets up the long. It a great trade where price almost doesn't move against you at all.

I - Price starts to bump up against the mean here at 97, but it never goes far.

J - The short at J is the RET after the DL break, which does fail.

K - The short here can be taken as well. Sure it looks like a range now, but having learned the lesson from D E and F, getting in now would help later. The trade doesn't go far, but I guess as I see price coming back up, I could get out for a profit of a point or two and just try again if the short sets up.

L - And here is the short setup again. If I tell myself we just tried to go lower but couldn't, then I wont put the trade on, but in this case, trying this short a third time gives us the break below 88 to some nice profit.

M - Here we have no problem breaking the low of G and getting past the mean from yesterday.

N - Great area for a long, plotted in real time. We have a higher low, and this would also be a RET after the tight SL break. Price does move against me by what would have been my entry, but less than 2 points. It then also forms another higher low, more confirmation.

So what is the take home message today? Giving price a bit of room is essential, but I am sure in real time I can't until I have a bit of profit under my belt. Thinking of excuses why I shouldn't put on a trade keeps me out of trading all together. The perfect trades that I am looking for where price never comes back to your entry are really rare, so impossible to do. Getting in early before the trend even establishes seems like what I keep gravitating towards. This will require trading within the ranges, so my prep work of waiting to leave a range is clearly being violated. This will also require more trading, and multiple re-entries. But perhaps this is what I will have to do to get over the fear. Just keep getting in for a good price, keep scratching for minimal loss, and eventually get into the trades that takes off.

At the end of the session now, its obvious that shorting below C, the failure to break the high of yesterday and the high of today which formed the double top on the hourly chart is the big picture. As Db outlined in his prep, the means are also providing lots of opportunity lately. All of this is useless of course if I don't put on a trade.
 
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