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Research: trading pullbacks in CL

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Research: trading pullbacks in CL

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

3/3/14, Monday

This is bordering on either a channel trade or a breakout pullback, however you want to define it. I define the breakout pullback as a pullback that happens from a trading range breakout where the breakout leg is equal to or less than the width of the range.

1. The market gaps up respectably, but then a little bearish leg starts.
2. The bulls begin channeling up, finally breaking out. The breakout isn't exactly inspiring, it is fairly weak.
3. The pullback is almost the same strength as the breakout leg, which might be expected in a breakout pullback.
4. A very thin entry bar.

As we can see, this one quickly failed, though not right away. The very good risk reward of this particular setup could have made it worth a risk.

If we look at the Globex chart we see that the strong bullish action overnight began weakening by the morning session, with deep pullbacks (i). When you combine that with the fairly weak breakout, it raises suspicions. Later on in the session this ends up being a breakout failure.

Last edited by Georgii; September 11th, 2014 at 03:26 PM.
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  #72 (permalink)
New York, NY, USA
Posts: 105 since Jun 2013
Thanks: 2 given, 46 received

3/4/14, Tuesday

1. The market gapped down after a higher day yesterday.
2. The trend continued lower, after which we see a climax down bar. The trend begins weakening significantly here with a pretty sharp reversal bar.
3. The pullback goes from strong to weaker.
4. A decent entry bar with good risk reward, a lower close would have been nice. The bar fails.
4a. A complex style entry, but the pullback is fairly deep here and has almost entirely retraced the last leg of the trend.

The follow through on the second leg would have probably prompted an earlier exit somewhere.

We see on the 512 tick chart two possible entries (i and ii), probably on the aggressive side though ii would have yielded fantastic risk reward.

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

3/5/14, Wednesday: INVENTORIES DAY

1. We gap slightly lower from yesterday's close, pressing toward the bottom of yesterday's low.
2. The market breaks down pretty strongly.
3. The pullback is on the weak side.
4. The entry bar is neutral, it is also by session support to the left which is good confluence.

The only concern here is the time before the inventories report. we'd be entering here at 10:10, which is just 10 minutes away from report time. It probably would have required exiting for a scratch or a small loss.

2a. The inventory report shows bearishness.
3a. A medium strength pullback.
4a. A pretty good entry bar.

Follow through begins, but then it sharply is whacked out by the bull bar. It may have been possible to exit with a small loss here depending on how the trade was managed.

4b. This is a very aggressive entry after such a strong bull bar. We don't see here whether we would have gotten triggered in and stopped out, or not triggered until the next bar (which closed at 11:30, after which we don't take trades). The 512 tick chart tells us we would not have gotten triggered before 11:30 on the 5 minute, which is fortunate because otherwise we would have gotten stopped out a second time. We could have entered on the 512 tick just before 11:30 if we had felt strongly about this situation.

It's worthwhile noting that the market tends to snap back more after inventory reports, so it might warrant being more cautious with our setups.

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

3/6/14, Thursday

1. Yesterday was a down trending day. The moving averages are slowing down, the distance between them suggests fairly strong bearish action. This actually works against our trend thesis. The market opened with a gap lower.
2. After trying to go yet lower the market suddenly burst higher, offering a bit of a surprise to the bears.
3. The pullback is fairly weak. At 10:00 factory orders pushes things down a bit more, then we get a tight bar.
4. The entry bar here is pretty excellent from a risk reward standpoint.

We see follow through, but had we had a stop just behind the signal bar, we would have gotten taken out for a full loss (though it would be smaller than the potential reward). It's worth noting that the market tested a session support level which is illustrated on both the 5 min and 512 tick chart.

A reentry at 4a would have been on the thick side but doable.

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

3/7/14, Friday

This could be argued to be a breakout pullback...

1. The market gaps up. The prior day showed a pretty serious reversal.
2. The trend is on the weak side for sure.
3. The retracement starts weak but then accelerates.
4. This entry bar turns out to be a pretty decent reversal.

Follow through is excellent.

"A" is technically not a pullback (market didn't significantly break new highs), more of a bullish channel type of pullback which is a slightly different animal.

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

3/10/14, Monday

I want to say up front that this is really more of an inside range trade than a proper pullback, but it's easy to fall into the trap of categorizing everything that fails as a trade that falls outside of the parameters and those that succeed into the chosen parameters. As this is a borderline trade, I want to include it anyway.

1. The market gapped down, and there was a strong overnight trend if we look at the Globex session.
2. The market starts by retracing up, then it moves down again. The move is medium in strength.
3. The retracement starts pretty strongly, then weakens.
4. The record shows no news at 10:00, so this may have been a valid entry.

The follow through is pretty quick to reverse.

Point 'A' is definitely not a complex pullback, we've retraced nearly 100% of the move so that would never count.

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

3/11/14, Tuesday

1. Yesterday the market was rangebound, with a fairly significant sell off into the close.
2. Today opens with a pretty significant bearish mode.
3. The retracement is pretty strong.
4. Not the most optimal signal bar, but it did trigger.

Follow through was pretty challenging here, a move that covered nearly to the profit target, then retraced sharply.

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

3/12/14, Wednesday: INVENTORIES DAY

This was an inventories day but no good pullback opportunities. A is an inner range trade, which would have turned out good if you had exited just on time - otherwise you'd be in for quite a smack!

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

3/13/14, Thursday

This is definitely more of a breakout pullback trade.

1. We have an overall rangebound situation since yesterday.
2. A weak to medium strength bullish trend emerrges out of today's highs.
3. A decelerating pullback.
4. Excellent entry bar.

Follow through is pretty much ideal here.

We get another chance to take a pullback...

2a. A stronger trend than the last one.
3a. A fairly mixed, weak pullback.
4a. Signal bar is weak but acceptable for a 1:1 risk reward.

Follow through was good, but then ended up reversing fast.

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

3/14/14, Friday

Someone may be tempted to call 'A' a pullback but this is really just an inner range trade. Some pretty sharp reversal action happened around 10:20.

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