A - Before the open, I would be inclined to short here. First, I have a double top with the OH, and 2nd, I've got a trading range low around 3824 as a possible target area so this could be good for 6 points.
B - At the open I have this 5 min DL drawn in, but since we are already so close to it, its hard to give this too much emphasis. We do break below, and I suppose the short as marked could be considered given the RET and bounce off the OH.
C - We only make it down this far, sure enough, it matches up perfectly with the little spike down below the range low half an hour ago. (I marked my range low not with the lowest low, but where most of the bars touched).
D - A big move up, no problem going above the OH this time and we consolidate here.
E - Here is our RET and a place to go long. Now on the one hand I am a bit worried because this isn't just a simple RET. We had 5 mins of consolidation, a mini trading range, and then we dropped below, so I wouldn't call this an ordinary RET. But on the other hand, taking the long as marked at around 36, I've got enough room to get out if we only make it to the previous high. I got this from ND and it makes wonderful sense. I am always actually scared of RETs for the very simple reason that they might double top or double bottom. But with enough airspace like this, it seems safer.
F - Sure enough, we essentially double top.
G - On the way down, we have some hesitation here at the previous low, but when we do break below, its solid.
H - Here is the break below the new 5 min DL, but no short setup yet.
I - Now we have a beautiful RET up to the breakout level of the 5 min DL. Now here is the thing... is this why price rose, just because every trader knew a 5 min DL broke and wanted to test it? I hardly doubt it. I also doubt that most traders, or who ever supplies most of the volume, is using 5 min charts. But for whatever reason, perhaps its just a simple RET, going short below these bars is a solid trade. Luckily the fill happens below the next bar which is shorter, so a stop above this bar is less risk at 25 versus a stop above the bar right below "I" at 27. Price of course just drops after this.
J - Well we stop here, below the OL, but above the PDL.
K - As we climb back up, I note that we go right past the 3 min consolidation area to the left. But although we are climbing quick, we need a RET somewhere.
L - Sure enough, we get it here, and a long above here is a legit trade. It does well, and we can also draw in a new DL. This is of course our perfect 123 setup. After such a strong down move though, taking any 123 isn't the smartest I think, but I like this one more because we broke through that little 3 min range I pointed out to the left of K. This too is something ND taught me.
M - This is another simple RET to go long. I am still mindful of the strong downmove, and we are hovering around the 50% level, but lets just mark it in.
N - We only make it this far, but it is a few points above that 50%. What I should have done is drawn in a 5 min SL connecting the highs at F and now here at N... this would have helped me later as price came back up.
P - On the way down, we break through the DL....
Q - But we stop short of the previous low. On a higher time frame chart, the low at J is a double bottom on the hourly and the daily as well. So coming down to Q this time I think would mean either a solid reversal or a solid penetration.
R - I mark in this hinge. You know, my desire is just to take them. The longer I wait for a setup, the longer I wait for confirmation, the worse my price is. After this, its a great 20 point move up.
Above here is also where the 5 min SL would break had I drawn it in, and I can clearly see the RET that would allow me to get a fill at 3821 around 10 mins after R. The low on that signal bar is 16 mind you... so this is a 5 point risk trade... but it works really well.
SUMMARY
I will follow up in the next post with where I'm at now in regards to the trading plan.
