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Research: trading pullbacks in CL


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Research: trading pullbacks in CL

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  #51 (permalink)
Birmingham, AL
 
 
Posts: 1,065 since Apr 2012


Georgii View Post
Thank you indextrader7! If there are any helpful hints or observations you can make in any way, I'd be happy to hear them!

Well, I have only skimmed through your posts, but it appears you're learning and seeing things well.

On a side note, it's hilarious that you are putting forward all this good work, and about the only comments you have gotten are things like, "Why are you using "we" so much?" and "Hey, you should you the moving average that I use". LOL get used to that stuff. whew.... So again, I commend you on your hard work here and willingness to teach and share.

I would initially think you are missing some of the best setups though. For example, on the last charts you posted entitled "2/5/14, Wednesday: INVENTORIES DAY" why not trade the beautiful breakout pullback once that GLOBEX range was clearly pushed down out of, seems like the best pullback to take on the whole chart to me. If you're in a range type environment, and then that range finally clearly breaks down, the pullback to firm up that level is pretty sweet trade.

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  #52 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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indextrader7 View Post
LOL get used to that stuff. whew.... So again, I commend you on your hard work here and willingness to teach and share.

Of course my favorite kind of feedback is of the constructive variety I think there's nothing cooler than when people who have good experience help you out with good ideas and feedback.


Quoting 
I would initially think you are missing some of the best setups though. For example, on the last charts you posted entitled "2/5/14, Wednesday: INVENTORIES DAY" why not trade the beautiful breakout pullback once that GLOBEX range was clearly pushed down out of, seems like the best pullback to take on the whole chart to me. If you're in a range type environment, and then that range finally clearly breaks down, the pullback to firm up that level is pretty sweet trade.

THANK YOU for noting that one! I sort of missed it because I'll admit I was rushing as I was writing. It's actually marked by point viii, but I never got to commenting it.

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  #53 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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2/6/14, Thursday

No valid signals here today...



We can see by A that some may have been tempted to go long for a continuation of the bullish drive, but the extremely sharp pullback in my view would have invalidated this as a pullback trade, at least in my book.

At B we see a breakout pullback of sorts, but the range is a bit tough to define in these circumstances, and the pullback is very aggressive.

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  #54 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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2/7/14, Friday



1. Yesterday's session ended with a pretty good double bottom reversal, even though it closed a bit down.
2. The pit session opens with a sharp bang down, but it is rather quickly corrected and the trend proceeds up pretty decently. It begins to get messy at the extreme, sort of smushing around.
3. This is a pretty messy pullback overall, lots of overlap. That can classify it as weak even though the last bar is pretty full. There is no news at 10 today, so we don't have any news related restrictions so far.
4. The reversal bar is neutral to bullish, not ideal but it's acceptable and not too thick.

The trade would have completed about 80%, so depending on how we managed things, we may have gotten out with an 0.25 or 0.5 R profit. A negative scratch here would indicate very loose money management.

4a. We had news at 10:30 this day, so shortly after we get a complex pullback entry. The entry bar is neutral to down, but it gives us very good risk reward.

The complex pullback completed pretty well. We could have comfortably trailed our stop under the swing low and we'd be pretty good to go.

The Globex more or less speaks for itself.

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  #55 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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2/10/14, Monday



Here's another day with, in my view, no valid entries based on how we've started defining things. I purposely included the prior day (a Friday) and this day (Monday) to show what kind of a trend this is - a very tight, upwardly pressing trend. What is particularly interesting here is the sharp initial sell off we see in the Globex session (Sunday night), that rather quickly corrects, after which the bulls continue the same exact slow grinding trend upward. A pitchfork analyst would be having a field day with this one, and many a careless counter-trend trader had likely been stabbed here.

Buying the dip at A would make sense technically, but it is not the type of pullback we are trying to define here.

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  #56 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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2/11/14, Tuesday



On the 5 minute chart there are no valid entries here. This market is just stuck in a range, and there is a plausible bias higher because yesterday there was a pretty strong upward trend (as a matter of fact it was persisting from last Friday). The bearish leg by A offers no good entries, and the pullback after the bullish reversal swing into the range is an inside range trade, not a proper complex pullback.

On the 512 tick chart on the right, we do see a potential short entry by i. This lines up with a support now turned resistance zone from yesterday's trading, and using the attractive looking 512 tick entry bar we would have had a perfect 1:1 trade. However do pay attention at ii, how the market very quickly turned up and went inside the range. This sort of reminds us of what happened on 2/5/14, when the Globex revealed an important support level that wasn't clear on the 5 minute chart. Very similar behavior, especially given the bullish strength show in the Globex session which means they are still quite strong here. The wiser thing probably would have been to pass entirely.

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  #57 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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2/12/14 Wednesday: INVENTORIES DAY



1. A pretty strong and significant gap. We can see during Globex what happened: a relentless trend.
2. This is a strong bar, but I would have liked to see at least one more before really calling this a pullback, so this is a bit of a reluctant inclusion.
3. The pullback is on the strong side and it is complex. It is fairly deep as well.
4. The entry bar is good, it shows bullish presence and it is not thick.

The completion afterward is pretty awkward, would have definitely tested one's patience.

The inventories report throws the market into a serious range bound situation.

This next setup is not really a proper pullback, more of a breakout pullback, but I decided to analyze it anyway.

2a. This is a reversal that descends pretty strongly and breaks session support.
3a. The pullback here is pretty sharp.
4a. This may be an acceptable entry bar, but it is pretty counter-trend. That combined with the sharp pullback and the fact that inventories caused a big opposing pull makes this less appetizing to my taste.

We see on the 512 tick chart on the right we did have a complex entry that we could have taken right before 11:30 that would have completed rather well (the completion is cut off on the 512 tick chart but can be seen by examining the gray area on the 5 minute chart).

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  #58 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
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2/13/14, Thursday



It's easy to fall into the trap of recognizing very questionable setups as valid that end up completing, and not recognizing those who are failures but conform to our criteria.

If trading on this day I would be very reluctant to take pullback A, because the prior day showed strong selling pressure, and here we are coming from the bottom, aiming for the pit session close. On top of which we have a fairly weak push up and a strong, deep retracement covering about 75% of the first and only bull bar up.

The signal bar with a long tail is the only thing offering some comfort, but a bullish close would have been of more comfort especially in such questionable circumstances. The strong trend seen during the Globex session where there was an obvious reversal may have given some more comfort, but I'm still very uneasy about this.

I'd really think it'd be wise to pass despite the pretty decent follow through this got.

Pullback B is more of a breakout pullback, it had a fairly deep retracement, the good entry bar was the only thing that offered comfort.

Again, a questionable situation given the context of the prior day trend and other aforementioned factors, but the Globex chart may have given you more guts to give at least one of them a shot.

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  #59 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
Thanks: 2 given, 46 received

2/14/14, Friday

Happy Valentine's Day!



We have another day that at least on the 5 minute chart shows no entries.

A has no bar that would qualify as an entry bar. The bars merely triangulate. There is an inner bar entry there, but it is too thick of an entry when you consider the stop placement.

B did not retrace far enough to offer a good entry especially considering the weakness this trend began showing. A mad reversal resulted. Man, I want to learn to trade those!

We see some possible entry points on the 512 tick chart (i being an aggressive entry, ii more conservative but still in a potentially overextended situation).

So far, February hasn't been a great month compared to January. Since it's Valentine's day you may feel particularly hurt that the market isn't showing you any love, or that you won't look good in front of your significant other for having a breakeven or down month so far. But there's nothing worse in such situations than trying to make up for that by taking mediocre setups and not following your rules. And we already know that there's nothing more important than following your rules...

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  #60 (permalink)
New York, NY, USA
 
 
Posts: 105 since Jun 2013
Thanks: 2 given, 46 received


2/17-2/18/14

Monday (President's Day), Tuesday



A good rule of thumb, if the US stock market is closed, don't trade. Sure, things go on in Europe, but even the Europeans are not keen on taking bets when the Americans are out. Granted you could get some unexpected news, but it's probably best to take the day off, and if you must work, go study some charts! If I'm ever in a situation where I'm studying my charts when the market is still moving, I disconnect the live data feed so I'm not tempted to trade.

The next day, Tuesday, didn't see much activity. Someone may have been tempted into shorting by A, or going long by B, but these are inside of today's range and there really is no easy trend situation - I'd classify those as range trades.

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October 19, 2014


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