Tomorrow I'll make an effort to mark up charts in real time with potential trades. It's not my style to take all setups that present themselves; I prefer to take no more than 3-4 trades per day and thus tend to be highly selective. There's a lot of "gray area" in my charts and if I have any doubt about what I'm seeing, I pass.
For purposes of this thread I'll try to set that aside for the next few days and mark what I see while it's happening, which should be a good learning exercise.
Attached is a chart showing my analysis of CL this morning. Only one trade, a short that produced around a 40 tick profit, which is enough for me so I'll probably call it a day.
A few notes about how I trade CL specifically:
1. I do not take countertrend trades on CL. Moves too quickly; just not the right instrument for countertrend.
2. I am careful around round numbers (94, 95, etc.) as CL frequently seems to react to these areas. I will generally set a profit target close to the round number, not counting on a move much beyond it. That was the case today, where 94 also happened to be a prior low, so I set my profit target at 94.03 (a few ticks above so I'm more likely to get filled) anticipating support below 94.
3. I don't like to trade right away after the opening bell (vertical red line on my chart). I watch for a while to see what's shaping up before committing myself.
Today I saw signs that CL didn't "want" to go higher, and so was looking to enter on the first confirmed signs of a downtrend. The actual entry (point 4 on the attached chart) was not a picture-perfect bounce off the SMA, as in this case price pierced pretty far through the SMA before reversing. This still looks like a good short setup to me, so long as price reverses before hitting the upper envelope. By waiting for price to break the low of the prior bar before entering, I end up getting a low-risk entry. I placed the stop just over the swing high a bar or two prior to my entry, which was just a few ticks. This turned out to be a favorable risk:reward setup.
Thanks for your CL analysis. Perfect entry, congratulations. The entry was also at EMA 55 and VWAP I have additionally on my charts. And there was a divergence in the stochastics.
I stopped trading CL with the beginning of the libya crisis when CL began to move crazy. Perhaps IŽll have a look at it again soon.
The following user says Thank You to TempletonPeck for this post:
Hi worldwary, nice thread you have here. I did check a YM chart and i wanted to explore a different angle to look at some finer details. I do not trade the YM so here i have the benefit of hindsights but i think some of my observations could be helpfull. Personaly, i would have entered before your entry and i explain why on the chart provided.
The following 2 users say Thank You to trendisyourfriend for this post:
Latest update. A couple of long trades presented themselves, one win and one loss. Small net gain on the day so far trading just with-trend setups. Have not seen any compelling chop or countertrend setups yet today.
Thanks, appreciate the input. The kind of volume analysis you're doing here (is this market profile?) is a skillset I have never developed. Definitely something for me to explore further but for now it's like speaking a foreign language.