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The market made a healthy higher low off 51.50 overnight with an impulsive move up to retest the ON high. The picture today is a bit muddled, but the forces at play are clear.
52.50 is the first major level buyers need to conquer - not only yesterday's high, but the start of the weekend gap and a resistance that goes back to October. Above that, every 50 cents will be a challenge, but things start looking much better for buyers with sustained action over 53.00.
Today's one of those days that I feel has a high probability of not decisively breaking in either direction. If the bulls try to take Y_High and fail, that could set the stage for another test of 51. Holidays are coming. It's friday. I don't know if the market will want to make this decision today.
4:45 am I'm up and running here with plenty of time before the open. I have a mind to take a pre-open trade if I can get a good one. Price couldn't stick to new highs and is heading back to 52. We have Y_Close and ETH-VWAP hovering around here. I'll look for a bounce, but I wil wait for it and try not to force it. Price already sliced right through VWAP earlier overnight. We could be dropping right down to 51.75, following the trajectory of Low to Higher Low, and I want to make sure I have powder dry wherever that bounce comes. Alternatively, if price runs up and starts looking weak again around the high, there's a possible short there.
5:40am I'm being extremely tentative this morning. We bounced before touching VWAP and the turn was fast at 52.07. Did not get that one. The action looks strong, but we are pressed up against shortable levels. Just broke the ON-high and challened Y_High right at that 52.50 level, bouncing off it, there's definitely some big money sitting here at 52.50 but I have a sneaking suspicion that this is going to pop higher. Tempted to take a long on a little pull back to 52.38 and play for the pop, but that's risky business especially here 20 minutes before the open. When in doubt, SOH and wait for more context. Hanging tight for now.
If I hadn't botched my entry (entered, nervously exited for -5, then entered again) I'd have made at least some pizza money on this. As it stands, I took enough to cover commissions. I'll live.
Interesting day. Conviction is what was missing for me today. I had arrows going in different directions in my chart, and in my brain, and I let that cloud my decision making. I've encountered this problem before numerous times — it's essentially analysis paralysis. There's a point where I'm over-thinking it. There's a tendency when the picture isn't absolutely clear to start grabbing at more data - oh it's a friday or it's almost christmas or we're up against this level or that level and this looks strong and that looks soft... more bits to try and get closer to a solid prediction, but it doesn't help. It's either going up, sideways, or down. Pick one. And have confidence in your tactical skills being strong enough that you can afford to be wrong, because if you are, you'll factor that in and have more information, and you'll be right the next time, or the time after that.
In other words - I usually do best when I can distill my read to just a couple sentences stated with conviction, and factor in a heavy dose of flexibility. Today, I didn't, and I knew that, so I was hesitant, and so I only made 2 ticks. I can do better.
I started doing this hindsight analysis at the end of the day.
Today was interesting because we always (well...almost) get a pullback to vwap after the first slice through. Today, we shot straight up through vwap, no hesitation or little pullback to vwap. Is that a big sign of bullishness?
Secondly, on that pull-back, which marked the US open 5 min OR low, we still didn't make it to vwap, before bouncing again. A second big sign of bullishness? Enough to get in at that level and just hold all day?
You seem like a student of market action/price action, so I'm asking your opinion. Have you observed this phenomenon above? I really feel today's price action was relatively rare in the market, and hard to read/trade. Just trying to put together some clues to keep in my head for next time this happens.
"It does not matter how slowly you go, as long as you do not stop." Confucius
Hey @jackbravo, thanks for the comment, and a great question. Looking back at this chart, there were a number of things that were bullish about it BEFORE we even saw the no-touching-VWAP bounces.Here's a 5-minute chart. The most important thing on this chart pre-open imo is the higher low at 3:15 (pacific) followed by the impulsive run up, slicing through Y_Close and VWAP like butter, as you pointed out.
After that, correct, the bounces look strong - not even waiting to fully test VWAP. I think it makes sense to interpret this as bullish. If you think about it this way - you've got a number of people with varying resources looking to scale in as it gets closer to VWAP. The fact that as folks started buying, there wasn't enough selling pressure to even challenge it all the way down to those limit orders, just means there were a LOT more people looking to buy that level than there were sellers.
But what I think was even more telling that this was going to be a significant push higher (in hindsight) was the way that 3:30am impulsive move looked on the longer view:
So now we have an argument from a "fractal" point of view. A higher-low breakout on the multi-day chart, and within that, a higher-low breakout on the overnight chart. That to me says that you have multiple timeframe participants participating in the move, so it's got some legs.
Hey...thanks for your opinion. Your last point was particularly interesting to me, as I hadn't thought of price action reflected in multiple time frames equaling the OTF participants being on the same train. Makes sense though!
"It does not matter how slowly you go, as long as you do not stop." Confucius
I did not trade well on Monday, didn't have a real logic to my entries and and gave back a bit more than I had made in the previous couple sessions. Head just wasn't where I need it to be.
Didn't take any trades yesterday.
Today, preopen, I noted a few zones I was interested in for S/R levels. (rectangles). When the bottom zone broke after news, my bias shifted short and I looked for a pullback.
I took a little short after news off of yClose. Ain't much, but I'm happy to end the year with a few more of these baby steps, assuming they are in the right direction.
We've been tracking sideways-ish with heavily overlapping action for weeks now.
Today finds us a couple hours before the open having already expended the bulk of ATR in a dip.
Although a short from that blue rectangle near 53 sounds great, or at least off a retrace to VWAP, price is not obligated to get all the way back up there if this down push has one more leg in it.
Probability favors a new ON_L before the open. Short entered. Ommmm. Stop is pretty tight. We'll see. I chased the entry a little bit. Had been waiting for a retest of .65, but I didn't pounce on it when it got there.
Closed for +7. I gave up over half of my profits holding for a new low. I didn't scale into this trade, keeping it light. This limited my options for managing the trade and taking some off at say +15 or so. And tightening my stop to preserve SOME gains got me shaken out of the trade at resistance (silly) before it eventually hit my target without me.
Still, not the worst outcome for the first trade of the year. I know I'm not going to just run out there and magically start doing everything right. And though I did enough right things today to make a small gain, I need to remember that the theme of last year was not capitalizing enough on good ideas. This is a great example of what I need to improve this year.
Anyhow, this sell off is extended and will be ripe for a fade to the long side as long as we hold 52. I've got some other business to tend to and I I'll probably leave the fade for another day.
Hour and ten before the open. I'm later to the screen than I would like. I've got a nasty sore throat that won't die. CL still locked in the same labyrinth.
It's tempting to look at this structure and think short. However, it's also important to note that yesterday's move was cut off before touching, let alone breaking, the 52 area. So we've got a series of higher lows going up into this 53.25 zone. I think we have a reasonable probability of retesting the ON high today 53.30.
Unfortunately, at the time I decided I wanted to look for a long, it was just about ready to take off. I watched it slip away instead of entering. The blue vertical line in below image shows where I had the chance.
After missing this boat I did a good job of staying on the sidelines. A few times I almost jumped in impulsively, but each time I recognized that none of these impulses were well thought out, and I pulled my finger off the trigger.
I don't want to give myself a full "pass" today, because I did hesitate and miss a good trade after making the right call. But being sick and consequently getting to the screen a bit late and a bit groggy played a part here. Walking away without any damage, it could be worse.
I'm working on a study to analyze common behavior around the CL open. I'm hoping the results of this will give me some new ideas and added confidence trading the first hour of the RTH, opening up further opportunities.
Market almost popped out of the down channel yesterday, but dropped back in. So our frame of reference continues to be rather muddled with cross-currrents at play. With inventory report coming up today I won't be anticipating any huge move preopen.
Over night move was downward but not extensive. We are here between the VWAP and the ON_L and my question to myself is whether we are on our way to touch ETH_VWAP or make a new ON_L before the open? Or neither?
Price bounced off .55 overnight, a level it's reacted to over the past couple weeks, I think a little fade run up to VWAP has a chance. Just putting in a volume spike down, pausing short of the ON_L. I will try a very low-risk tight stop entry here long target back to VWAP. If the picture was clearer, I'd use a wider stop outside the low.
In long, Trying to lean into some weakness here and get a good price.
This fade trade was another good idea ruined because I pulled my stop in way too tight. -10. Both targets hit without me.
OK, I feel like the market is being very kind to me right now. It is giving me all the information I need to improve. This week so far has been a perfect level-set demonstrating exactly what behaviors I need to modify. First, I absolutely should have confidence in my market reads. My ideas, when I put some thought into them, are pretty good. And second, my desire to be comfortable in a trade by reducing my risk is probably my biggest problem right now.
I think part of the reason I'm still making this mistake over and over again, is because I haven't decided whether the right thing to do is a) use tight stops and allow myself to get shaken out BUT also be quick to get back in if that stop-out starts looking like a shake-out, or b) use wider stops, and let it ride. I think the answer, for me, doesn't need to be complicated. and it's probably a combination of both sentiments. Off the top of my head, here's the way I think I need to start looking at this problem right now:
1) Use stops that are wide enough to keep your bail-out order on the other side of some key levels,
2) Don't touch those stops until you see real reason to do so (new key inflection levels),
3) Assess your current stop placement first, THEN scale in. In other words don't tighten your stop just so you can comfortably add a lot. If the risk is too large for all-in on multiple lots, then scale in upon development of new key inflection levels where the risk is tolerable, whether in adverse or favorable territory.
4) Understand that there is NO stop that is completely impregnable and whip-saw proof. There is no 100% correct way to decide when to bail. If you get stopped out, and it turns back around, re-evaluate and absolutely re-enter if the trade looks right again.
For my next trade, and going forward, I'm focusing on modifying my risk management behavior, while hanging onto the other things I'm doing right. With the inventory report coming up in an hour, that's it for me until tomorrow.
I've come across the same dilemma. Initially, I told myself I just would just take the hit and reenter, since you never know how far against your entry the price is actually going to go. But then I came up with the idea of having 2 separate ways of entering, a "this is a good level to enter, but not sure how far to put my stop" and a "this is a good level to enter to test the edge of the trend, if I'm stopped out, then fine." In the latter condition, I use 2 contracts with tight stops. In the former condition, I use one contract with a wide stop (relatively wide). Anyway, it occurred to me that different strategies are needed for different scenarios.
"It does not matter how slowly you go, as long as you do not stop." Confucius
