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How do you play if you're stuck in a narrow channel?
Today I was trading /ES around 6:10 this morning. I got filled right after a breakout from a channel, which was great, until I realized that there is a resistance right above my position. I ended up holding to my position hoping that it will break out from this channel as well, however, it broke down to the lower channel and blew my stop.
Question is, given the above situation, was there anything in the price action that could help me out which I’d ignored? Or any other indicator which would have been helpful in this case?
Thank you
Can you help answer these questions from other members on NexusFi?
If your in and price go nowhere after x numbers I use 3 to 6) of periods, get out. Why wait and struggle to maybe get a gain. You have the same possibility to get a loss.
Wait til is range broke the barrier then, wait for a trading signal for A) a continuation or B) a reversal
One thing that I observe. Price need to be in movement to bring volatility. No movement, no possibility to gain. In ranging period, price as no where to go, so no profit to expect unless you scalp
Your view of the "channel" might be a little too tight. The chart you posted was a 5-range, and so if I am reading it correctly you defined the channel boundaries to be roughly 2.5 points. With the ES running an ATR from 15 points a day and up, expecting to confine it to that small of a range is tough to do.
Another thing to consider, what occured just before the price consolidated? What was the larger pattern? Taking a more distant view of the market can help you decide how to approach the pattern. For example, here is a section from this morning's price action, just after the employment report and through the major open.
The odds favor that pattern continuing to the upside. So, to trade condition that by "textbook" standards, you would not be in the trade inside the channel, but enter on a buy stop just above the consolidation.
If your in and price go nowhere after x numbers I use 3 to 6) of periods, get out. hy wait and struggle to maybe get a gain. You have the same possibility to get a loss.
