It is true, as a general rule, that gaps in the futures indices at the opening tend to close quickly. But the first move away from the Opening Range can often be telling. Randolph Newman, infamous pit trader from the old New Orleans cotton exchange, and my early mentor as a rookie trader, had a saying, "If it starts up fast, it seldom lasts." Of course, Randy had a lot of sayings. But this one played right into another rule we use at Valhalla to determine an early trade trigger. And today, that trade trigger was to short the Russell (symbol MR) at the point labeled "c" on the chart above. Take the course, Pivots, Patterns and Self Recognition and learn the other Breakfast Setups our menu has to offer. Come to daytradingmethods.com and sign up there.
Monday: Continuing with our tutorial on triangles...One fo the more interesting observations about triangles is how they so often set up reversals to the current trend. There is a special reason why this particular triangle in the SMH signaled a reversal to the downtrend. Although, plainly visible, no traders I have every worked with knew about it before I showed them. Come take the course Pivots, Patterns and Self Recognition. Learn this and other important trend reversal signals at daytradingmethods.com
Friday: The first breaking trend of the day is often hard to capture. Guess wrong just twice trying to capture it and you've probably ruined your trading pscyche for the rest of the day. But often, if you're patient, a setup occurs in the MidDay session that gives you an equal if not identical opportunity. Today's midday setup came with a unique classification of divergence. ValhallaFutures uses three: SPeed, Serial and Two-Frame. Take the course Pivots, Patterns and Self Recognition at daytradingmethods.com and learn to identify each when they occur.
Thursday: Momentum Bounce and Falling Away are just two of the ways from Valhalla Futures techniques that opening trade action in the futures can signal a trending day. Since these patterns are a classification of chaos rather than geometry, it takes more practice to see them. To supplant the decision support necessary to use chaos patterns, we add rules based on relative price. The course Pivots, Patterns and Self Recognition cover these rules in detail so that exact setups can be derrived at what others may only see as chaos.
Wednesday: The triangle is the hardest pattern of all to trade with any consistency--and yet there are whole books dedicated to its opportunities. Curtis Arnold's book title includes the phrase "A Proven Method for Consistently Beating the Market", while Teresa Lo, in apparent recognition of the triangle's demonstrable treachery, refuses to trade them at all. We at Valhalla Futures have actually identified some nine different triangle patterns that recur with frequency in the index futures. The most common attribute of one of these triangles, called the Split Opening Triangle, is its false breakout in the wrong direction, just before a true breakout in the oppposite direction breaks into a trend. Yesterday, we mentioned the Split Opening as a type of opening day model. Study the chart above and see if you can discern the false breakout that is actually a signal that the pattern was about to go decisively the opposite way. Come learn this and eight other key trade triggers associated with the index triangle patterns in the course Pivots, Patterns and Self Recognition, available through daytradingmethods.com
Tuesday: Yesterday, we talked about how a day could be divided into time periods, each with its own set of trade strategies. But there is also three ways to classify the day's behavior as a whole, three day type models. Valhalla Futures refers to one of these types of days as the Persistent Trend, which behaves exactly as its named Another day model is the Test-and-Reject, which is characterized by a very convincing head-fake in the wrong direction. And the last we call a Split Opening, which trades in both directions for a good part of the trading day. Obviously, if you knew which model the day was going to follow, not only would you know when and if to get out, you'd have a pretty good idea whether or not the day was even going provide enough opportunity to trade at all. Today, there was a very important event within the first few minutes of trading that signalled just such a Split Opening day. Had you seen the signal and predicted to a friend what the character of the day would be, he might think you psychic. But in truth, you wouldn't have been. You simply would have been better informed. Come to class at Pivots, Patterns and Self Recognition and learn these and many of the other signs of a well informed trader.
Monday: Even on a relatively trendless day, the market can still be seen to be divided into three distinct time periods during the day. The morning opening, the midday period, and the time period that leads up to the close. During these periods it can be said that there is a noticeable change in market behavior. There are some logistic items that help support these changes, but crowd psychology is the key component. The first period usually breaks into trend quickly, often after a head-fake in the wrong direction. The middle period is most often characterized by a slower and at times, meandering tone. The last period can continue on in an acceleration of the day's trend, or suddenly reverse, cancelling the day's trend out altogether. Since each time period is unique in its behavior, different trading techniques are best employed. Take the course Pivots, Patterns and Self recognition from Valhalla Futures at daytradingmethods.com and learn to utilize these trading techniques.
One of the most difficult aspects of human nature in trading is dealing with being wrong. And nothing affects your intraday daytrading more than having a trend prejudice as to what the market is supposed to do in the longer term time frame. Note yesterday's blog entry of Thursday, September 30. Using divergence, pattern and relative price, a valid sell signal for an end-of-day swing position was created at the close. According to this signal, today the market should have finished down, giving a swing position a profit, regardless of whether it started the day by going up or not. But this morning's action was giving three very important signals that a uptrending day was at hand for long intraday daytrade positions. But with a commitment to the short side already in place from last night's close, would you be able to even see these signals, let alone act on them? Probably not. In fact, with a position already committed in the longer term in the opposite direction, the probabilities are very high that your psyche will suffer from trend prejudice all day, adversely infecting your daytrade decisions. And if you're trading with leveraged index mutual funds for the longer time frame, you may not be able to liquidate the position immediately. And as for a possible intraday daytrade position, you might find your internal voice saying something like "I can't take a long position in the nearest time frame while I believe the longer time frame is going to be bearish. I can't trade against myself!" And indeed, perhaps you cannot. If you are this type of trader, and want to approach each day with the open mind necessary to decipher intraday trend direction, then you must consider parting with your end-of-day swing positions altogether. If there's anything that infects your daytrading with a trend prejudice in either direction prior to the signals actually taking shape, then that thing is going to cost you your precious trading capital quickly. Get rid of that thing immediately. Your success as a daytrader will depend on it. Read Part II of the Valhalla trading manual titled Self Recognition, and come join us each day and see how we handle our mistakes at daytradingmethods.com.
Thursday. That's what the SMH does when it's ready to move. It puts its swerve on. At ValhallaFutures, we use Event Concepts to define swing trade signals. And although the bulk of the work is focused on the shorter term intraday signals, an expanded version of the rules can be applied to the longer term end-of-day swing trades. Today, just such an Event Concept signaled an immiment turn for the weekly trend. The Russell 2k (symbol MR) filled a gap left open from Sep 22, the SMH displayced significant divergence, and furthermore displayed a topping pattern well-documented in the manual Pivots, Patterns and Self Recognition. A collision of pattern fruition and relative price. Come trade with us and learn the rules of these important signals. Check in at daytradersmethods.com.
Tuesday: Catching the early trend is the single most important focus of the day for floor traders. Nothing has more meaning and importance to their business. Some say that floor traders have an advantage over those working from their screens when trying discern early direction. They have noise, paper order flow coming into the pit, an immediate source of news and associated rumors, and an easily kept eye on the best traders around. But those of us trading off the floor from our screens have an advantage floor traders don't--if we would only learn to use it correctly. We have charts, and and a rule-based approach to go with them. What may seem like chaos to the inexperienced is like a piece of music when you learn the notes. The sell signal for today's downtrend was just such a sweet harmonic chord. How can all that pit noise compare!? Come join our trading room at daytradingmethods.com. Hear the music...be the trend.
Monday. Most of the signals garnered from leadership mentioned in this blog are from the Opening and 1st Hour Time Period. Holding positions overnight is higher risk. And in the futures markets, protective stop-loss orders placed in the Night Session in anticipation of tomorrow's Opening outcome run the risk of not being executed at all. But sometimes the leadership of the SMH is like a road map of what will happen on the following day, and is worth the risk. For instance, scroll back a couple days to the previous post of Thursday, September 24. The subject was bifercation. The SMH was in an ABC upward correction while the Dow futures, the YM, was continuing its downtrend from the day before. Now study Friday's end-of-day chart above. Friday's YM was a Sequel to Thursday's SMH Prequel. But bifercation occurred again on Friday, signaling that most likely, the YM would follow the SMH right back down. If on Friday, at the end of the day, I had put up a blank chart for the YM, and asked you to take a position for Monday's Opening based on what you see in Friday's SMH, which way would you position your trade, long or short?
Join our chat room and get the advantage of having these signals in real-time, here at daytradingmethods.com
Friday. The first trade of the day usually has limited trend expectations, but it can often mean the difference between having a good trading day or not--but you only have seconds to make up your mind about it. And moreover, if multiple contracts are being used in a money management scheme to retain a partial position, then the first trade of the day can last the whole day. In any case, a decision to take one direction over the other in the first few minutes after the opening requires a clear and concise rule-based approach for immediate decision support. Take the course Pivots, Patterns and Self Recognition and learn why a buy signal occurred for the initial day's trend so quickly after the opening today. (Click to expand the chart above.)
Thursday. So it's bifercated....so what? No doubt you've heard this 25 cent word on a financial cable station before. It means the market direction is forked, one group going one direction, one in the opposite direction. Like today. The S&P exhibited good downside follow through to yesterday's selling, almost as a Sequel to yesterday's Prequel. The SMH, on the other hand correcting back upwards against yesterday's sharp thrust down. Moreover, you could see this taking shape in the first thirty minutes of trading. But so what? Knowking what kind of day model might be at hand can make or break you're whole trading day, that's what. Come to the chat room for Valhalla Futures and take the course that goes along with it. Learn why day modeling and their accompanying early warning signals can shape the way you trade.
Wednesday. The psychological decision environment the trader faces each day is full of challenge. Many of these mental challenges are the same from day to day. Take the one wherein an opportunity to get on board a significant trend already seems to have slipped away before it is even recognized. Sound familiar? Very often, a daytrading trend of such significance will extend out over the entire day as a continuous trend day. On the face of it, such a day would seem to contain the best and easiest of profit opportunities, with hardly any hesitation or back pedalling throughout the day. And yet, how hard it is to quickly recognize and meet such a day with confidence in time enough to take best advantage with an early position in the right direction. Take today, for instance. Note the weekly market background description from which it sprang: more signs of growth in the economy, with yet higher stock prices pushing the psychological background into bullish euphoria. The pressure surrounding the trader not to be left behind is hard not to resist. And then the sharp gap down, catching everyone by surprise.
If you're still bullish into this gap down, the temptation to fade it for a recovery rally is strong. And if you've seen it correctly as a long awaited correction, price is already so far below the previous day's closings that the opening seems almost to far gone to participate. So what do you do? You might choose to wait for higher prices and end up missing out on the bearish trend altogether; you might try to get even with the market for doing this to you by going against the trend, trying to pick the top or bottom; or place only tentative sell orders along the way that get shaken out quickly by counter trend bull spikes until you throw your hands up in disgust at the day in exhaustion. It is only at the end of the day, looking back over it that the correct strategy now seems so simple: get in early and out via a market-on-close order.
Take the course Pivots, Patterns and Self Recognition and learn the signals that would have gotten you short on this day shortly after the opening and then again before the big break down later in the day. A better mental decision environment awaits you...
The hesitation dance step price displays before uncovering a tradeable trend is usually a confusing trick to learn--and a costly one for traders. Study the chart above (click to enlarge). Using the methodology from Pivots, Patterns and Self Recognition, there were specific rules that would have kept you out of shorting the NQ index at the first red down-arrow, and accompanying rules to get you into the short at the second and higher red arrow. If your techiques didn't position you correctly in the short NQ trade this morning, then perhaps you should consider taking our intraday swing trading course from daytradingmethods.com.
A lot of costly and frustrating trades can take place in a directionless market. Grant Noble, in his book The Trader's Edge, talks about the Split Opening in the grain pits as one wherein the opening price of the day is within the prior day's closing range. This often suggests that the market is in temporary balance and directionless action will follow. The same can apply to the stock index contracts, with some notable variations. Today's open just touched yesterday's closing range, and narrow action proceeded to follow well into the time of this writing at 3pm ET. The specific variations of this signal best reserved for the stock index contracts are discussed in the training course Pivots, Patterns and Self Recognition. Take the course and learn these and other capital-saving tips from daytradingmethods.com.
Your first trade of the day can have an encouraging or debilitating affect on the rest of your trading day. Identifying this initial trade is often very tricky. What is a trend to get on, and what is a trend about to reverse? Will the gap close, or will the price action fail? Study the chart above (click to enlarge). If your present trade methods didn't give three signals to bet short at the highs and two key signals to cover and go long at the lows, then consider taking the course Pivots, Patterns and Self Recognition. The ValhallaFutures methodologies identified these signals, and you can learn them too.
One of the least understood and under-utilized daytrade patterns in the index futures contracts is the MidDay Channel. Conveniently written off from consideration the amorphous form of the midday doldrums, this pattern is packed with an equal move in the original trend direction if you know how it's proscribed and triggered. Measuring half way between the day's high and low, the MidDay Channel can often provide a second chance at capturing a piece of the day's original trend missed by the speed of the earlier move. To learn its elements and to recognize its format, come study the intraday swing trading course Pivots, Patterns and Self Recognition.
There are three components that should be present for a Technical Event Concept: price level, time-of-day, and pattern fruition. When all three of these come together a tradeable swing signal is almost always at hand. On Monday, August 16, '04, all three came together nicely to call the end of one swing trend and the beginning of another. Take the course Pivots, Patterns, and Self Recognition and learn to recognize an Event Concept in time to position for intraday swing trades in the futures markets like these.
Sometimes trading is like fishing the day after the big one got away. First, you have to show up again. And second, you have to know what you're looking for. And if you kept one eye on the large triangle that was forming all morning today, like an eye to where the fish were biting yesterday, you just might have hooked the Sequel to yesterday's big diving fish. Learn the Prequel-Sequel and the rules to trading triangles in Pivots, Patterns and Self Recognition, available soon through daytradingmethods.com.
The apex of a triangle can provide one of the best trade opportunities on the board. But few traders bother to contruct the apex on expanding triangles, also referred to as reverse symmetrical. (Click to study the chart above.) How price action reacts to a kiss of the apex can uncover the direction for the next significant trend. There are over 12 different trade setups regarding triangles in the course Pivots, Patterns and Self Recognition. Check it out at daytradingmethods.com.
And so does market action fix its price holes, even if it misses a few. A intraday swing trader can't afford to ignore the gapping price holes left on the bar charts, no matter newly created or long ignored. Click on the chart above to study today's action closely against that of a week ago. Price opened today filling the air space left from the week old gap, and then sold off again to close the gap completely, before an even sharper price reversal. Knowing where these price holes are each trading day is like having a road map around the downtown D.C. street terrain. Ignore them at your peril. Part of the training course for Pivots, Patterns and Self Recognition is a live, graphic chat room where these price holes are discussed each day. Come join us. Driving school is open.
The day's first swing trend is often difficult to discern. Once that direction seems committed, traders rush to the small retracements to position for further continuance. But alas, often by the time a trend is uncovered, it's already come to an end, and for the intraday swing trader, a new one has already begun. There were two signals in the above charts that telegraphed to the observant trader that the initial bear trend exposed after the opening had,in fact, come to an end (click to enlarge). And not a single oscillator is necessary to see it. If you're trading kit doesn't have these two tools in it, then perhaps you should consider taking the course Pivots, Patterns and Self Recognition from ValhallaFutures, available at daytradingmethods.com.
The outcome of a MidDay Period consolidation pattern is often the result of anticipation failure. This is the way the market works. It could not be otherwise so. All morning of Monday, August 1, the atmosphere surrounding the market was dripping with fear and loathing, communicating lower prices dead ahead. Police surrounding fresh terrorist targets in New York and D.C., a gap down opening bell in all indices and media talking heads reminding us of stock market reactions to past terrorist activities. Indeed, even the charts seem to be cooperating as corrections to the morning sell-offs seem only to be ready to collapse into selling again. And yet...by the end of the day the market was not selling off from the point indicated in the chart above labelled "C". Price eventually rallied sharply and finished higher after reaching the highs of the previous day. Study the concept of pattern failure in the training course Pivots, Patterns and Self Recognition, and learn to spot the true under currents to price with two little known patterns called the Dough Bar and the Fail Trigger. (The quote, in case you didn't recognize it, is from Cool Hand Luke.)
Market behavior has a tendency to repeat itself in two consequetive days, one a Prequel to the next day's Sequel. Click on the graph above and you can study the the 1st Hour action on the morning of Thursday, July 29, against the same period of the following day, Friday, the 30th. By the time the day was finally over, the trend was no better established or potentially profitable on the day of the Sequel than it had been on the day of the Prequel. The similar opening pattern of the 2nd day indicated a Sequel pattern was in play. It was a strong indication that the fairways and smooth greens of your local golf course might be a better way to spend the day.
The market often gives early tell-tale signs where it intends to go for the rest of the day. Likewise, the market sometimes indicates quickly after the opening that there is no significant trend at hand at all. Thursday, July 29, was just such a day. Knowing this in advance of the day can save the trader considerable frustration and a lot of precious capitol. Study these and the other day-model identities in the course Pivots, Patterns and Self Recognition.
A better example of the Jump Ball opening could not be found than today's early price action. After tossing the ball up for grabs, it quickly came back down into play below the opening price. Then one of the several favored Test-and-Reject setups from the training manual was employed to capture the accelerating down trend. Take the course and learn the tricks in Pivots, Patterns and Self-Recognition.
One of the key and most often ignore aspects of divergence is established leadership. If an index is lagging the day's trend, it will naturally be diverging from other indices at every temporary turn. Trading on such divergences will usually produce losing trades, or at best winning scalps. Since we are looking for intraday swing signals, we first note which index is leading, and then watch it for divergence against the trend in which it led. Today was just such a day. It was the SMH that was leading the market down dramatically all morning. But when the ES contract finally followed suit to make a new intraday low, the SMH was already turning back up against the trend. Having led price down, it was now meaningful when it began leading it back up. Study all the forms of special divergence and intraday swing signals in the manual Pivots, Patterns and Self Recognition.
Any day's price action can be broken down into one of three general day models. Each of these three day types have their own trade setups that offer better chances for profits. The faster a trader can identify the type of day most likely at hand, the better chance he has of choosing which set of setup strategies are most likely to succeed.
One of these day types is the Test-and-Reject. On this day type, price often starts off quickly in one direction, is immediately rejected, and then turns and comes back to opening levels. A bearish Test-and-Reject day starts off like a basketball game where the Jump Ball sends the price straight up. But once tipped, the ball quickly falls back down into play. Today's action was just such a Jump Ball, giving an early signal that any price pushes above the opening would not be greeted favorably. Study all three types of day models in the course Pivots, Patterns and Self Recognition, and learn to recognize the best setup models that go with them before quickly, before the day's best opportunities slip away.
After yesterday's midday reversal, there was much anticipation for a follow through today. Thus, a gap down opening was seen as a favorable buy opportunity for many traders. But ValhallaFutures saw three elements that signalled the gap would not close with an initial rally. The third signal was also a setup to sell short. This signal was good for 4 pts in the ES, 10 in the NQ, and 50 in the YM (mini-Dow). Learn to identify these signals right at the moment they occur, in the training course from ValhallaFutures called Pivots, Patterns and Self Recognition.
Yesterday, the Semi-conductor Holders, SMH, gave a series of non-confirmations to the successive highs made by the S&P, symbol ES. That triggered a steep sell-off lasting the rest of the day. Today, the SMH did it again, but this time in the other direction, failing to confirm a series of new lows made by the ES. Coupled with two other critical elements of an Event Concept, this Serial Divergence put the finishing touches on a setup worth 14 large in the mini-S&P and nearly 120 in the mini-Dow. Study Serial Divergence, and two other noteworthy types of divergence called Two-Frame Divergence and SPeed Divergence in the course Pivots, Patterns and Self Recognition.
Unlike retail merchandise, there is seldom any value found in marked-down stock index goods when a bullish trend is indicated. Contrary to your emotions, the best buy is almost always the more expensive one, and is also the one giving you the least opportunity to get in. Today's early trade opportunity was just such an example. The SMH kicked off the opening with the largest gap up of all the indices, but when it came to marking down price, the mini-Dow showed itself the most reluctant. While the SMH was busy selling off to close it's gap, the YM was unable to even get below it's opening price. Which one was the better buy at their respective support points? The better judgement was proven by the resulting reaction. Clearly the one showing the least discount was the better buy. But you'll never hear that coming across the intercom while shopping the isles of your favorite discount store. Study the attributes of leadership and relative strength in the manual Pivots, Patterns and Self Recognition.
On an anticipated day of Federal Reserve testimony before Congress by Chairman Greenspan, trends are usually delayed until the end of the day. But two-sided trading can have its profitable if humble opportunities. Today's simple double top provided a short-sale signal worth 2 pts in the ES contract and 25 in the YM (mini-Dow) to close their respective gaps. Learn a special divergence trick to identify a double top or bottom just as it occurs, in the training course Pivots, Patterns and Self Recognition.
A Pivot Ledge is left on the charts whenever price action breaks sharply away from a consolidation pattern. This price point often has a magnetic affect on future price action, even if well into the future. After a Triangle Pair Signal near the Noon Hour Low in the mini-Dow today, price reached just such a Pivot Ledge in this morning's sell-off in the mini-S&P, (ES). Valhalla Futures is still in this position as the time of this posting, but a return to the Opening Range as target would produce a 6 pt profit in the ES and 70 pts in the YM (mini-Dow). Study the rules of this market phenom and dozens of others in the manual Pivots, Patterns and Self Recognition.
...This Sox is still on the scene everyday and still leading the way with its footsteps. SMH, the equity holding instrument for a basket of semiconductor stocks that the SOX index tracks, was certaintly at the forefront of the technology bubble in the '90's. But unlike the since-watered-down NQ, it's still leading the way in the markets. Keep an eye on this vehicle during the trading day as a cue for direction and trade setup. With the Range High/Low Opening Signal and early downside leadership shown by the SMH this morning, an early sell setup in the ES was worth a quick 6 pts, 12 pts in the NQ and about 50 in the mini-Dow (YM). Study the rules for the 1st hour trade setups in the training course from ValhallaFutures, found today through futurestrade.com. (click image to enlarge)
The Sequel to a Prequel can occur at any time, but none so unexpectedly as the opening patterns. Today's complimentary triangle reversal patterns matched yesterday's Noon Hour High very nicely, except that they appeared minutes after the opening bell. The best way to prepare for a possible Sequel is simply review yesterday's patterns before the opening bell. Study other examples of the Prequel-Sequel phenom in the manual Pivots, Patterns and Self Recognition, available from daytradingmethods.com.(click image to enlarge)
The key to identifying today's top was not only in the complimentary pair of triangle reversal patterns appearing near the Noon Hour High, it was WHERE these two triangles made their appearance that cemented this setup as an Event Concept. In the mini-Dow, symbol YM, price reached its climax by closing a gap from some 10 days earlier. A 50% retracement back down from the morning's early rally was worth 40 points in the YM at the triangle's break. Learn the all the elements of an Event Concept to identify swing trade opportunities in the training course from ValhallaFutures at futurestrade.com.(click image to enlarge)
Many traders focus on the morning's gap exclusively and foolishly forget about previous day's unfilled gaps today. These old unfilled gap can be the most significant points of support/resistance of the day, and more, price has a tendency to be called back to these gaps as if unfinished business was awaiting before further trend resolution can unfold. In the 60-min chart above for the Russell 2000, symbol MR04U or ER2, price signaled a trend reversal after an initial decline from a unfilled gap nearly a month old, from June 15th. Along with the other elements of the signal, the trade was worth nearly 7 points. Learn the rules for marking unfilled gaps in the training course from valhallafutures. (The complete quote "Way back yonder on the charts of cotton, old time gaps be not forgotten" is a witicism from Randolph Newman, a floor trader from the former New Orleans Cotton Exchange and mentor to the author as a young man.)
The Opening Range is for professional floor traders perhaps the most important price level of the day--or at least for the 1st Hour action. The quality and type of chart action as the market retraces to this price level often provides the best trade signals of the morning session. Study the setup categories involving the Opening Range as provided in the training course from ValhallaFutures. (click image to enlarge)
Caution: patience is required for successful trading. Resist the temptation to take trades outside of your setup universe. And today's opening hour was just such a temtation. Squint your eyes on the chart above in the section that precedes the trade entry arrow. You should be able to see a large W, a classic bottom formation, one of about 5 that occur commonly in the opening hour when trading begins with tiring consolidation instead of an immediate trend. A pattern once formed is once recognized. A convenient zigzag was then ideal for an entry, marked with the red arrow. The trade was worth some 25 points in the mini Dow and about 3.5 in the ES at the gap closing exit signal. Read about this and other formations under the type-of-day category called a Test-and-Reject, in the manual Pivots, Patterns and Self-Recognition.(click image to enlarge)
Yesterday, after a gap down, the trend continued lower without ever closing that gap. Today on a gap down, the market reversed, closed the gap and continued higher. But how would you know? The clue today was the Range High/Low Opening Signal occurring in the Nasdaq futures contract. The trade was good for 8 pts in the NQ with the Work-Done exit signal occuring at the Overnight High. Learn to recognize and use these powerful entry and exit signals in the training course Pivots, Patterns and Self Recognition.(click image to enlarge)
One of the more dependable opening trades of the day is betting that the gap will close on any given security or contract just after the opening bell. The problem is, often it doesn't. While traders kept their eyes on the potential gap-closing this morning, the three critical elements of a Technical Event Concept came together for a short signal in a continued trend down. These three elements are time, price level and pattern. Today's Event Trigger was good for 6 pts in the ES and 12 in the NQ. Learn to identify the specific elements of any Event Concept in the trading course from Valhalla Futures and your skills for knowing which way to trade a gap will increase dramatically.
And that might be good advice for any Friday, which tends to be less volatile in the afternoons than most. Trade early, break for the remainder of the day. And as if to accommodate our afternoon vacation plans today, the ES contract exhibited a bullish SPeed Divergence signal early in the session after taking out the Overnight Low. The long trade was good for 4 pts in the ES contract and about 40 in the mini Dow (YM). Look for the rules for a Pattern-to-Numbers setup in the manual Pivots, Patterns and Self Recognition. Then enjoy your afternoon, and all the best to you on our great country's 4th of July!!(click image to enlarge)
A pair of Range High/Low Opening signals in the NQ and the SMH tipped the scales right from the get-go that a bearish trending day was at hand. But since these two instruments seemed already too far advanced to get in on a position, the Trader would most likely have looked elsewhere for a setup. And it was easily found in the mini-Dow, symbol YM and the mini-Russell, symbol MR. A pair of triangle tops in a Test-and-Reject formation pleaded for recognition in the first few minutes of the day, while the NQ and SMH were virtually collapsing. The breaks were worth about 8 pts in the MR and at least 100 in the YM before any bounce of merit registered on the charts at all. Study the 1st Hour Time Period setups from Pivots, Patterns and Self Recognition for these and other setup signals.(click image to enlarge)
Like a game of baseball, trading on the day of an FOMC interest rate announcement can require patience, then suddenly all hell breaks lose. Many traders lose money positioining trades around news announcements. But using the rules of the Probe pattern can reap great rewards with very limited risk. The pattern appeared after the FOMC announcement today in every mini-index contract, offering about 8 pts potential in the ES, 10 in the NQ and about 50 in the mini-Dow. The rules for this trade pattern and all those found in this blog can be found in the trading course Pivots, Patterns and Self Recognition. (click image to enlarge)
Take what the market offers you, or trade the Russell 2k Index. Since the Semiconductor Holder SMH doesn't have a futures contract--yet, we transfer signals observed there onto other index contracts. But sometimes trading ranges are narrow and offer little opportunity, like today in the ES and NQ contracts. But if you were keeping an eye on the more volatile mini-Russell 2000 Index, symbol MR or ER2, today's offering wasn't too shabby. First, a pair of Opening directional signals between the SMH and ER2, the Re-ORB and the Range High/Low Opening, were good for about 5 pts in the mini-Russell. A smaller profit was offered near a Noon Hour High at a trendline break in the mini-Russell, after a pair of MidDay Triangles signaled a reversal in the SMH. This short trade was good for about 2 pts if held to the Last Hour Transition Time. The SMH then signaled a reversal swing back to the long side, but there were no clear patterns nor sufficient volatility left in any of the indices to warrant a position. If you want to learn more about these and other intraday index swing signals, join our trainging group for Pivots, Patterns and Self Recognition, available at daytradingmethods.com (click image to enlarge)
(Mon, June 28) Price gapped up higher and held its bullish bias all morning and well into the MidDay Time Period after forming a Split-Opening Triangle in the mini-Dow. This tell-tail triangle, which often accompanies the end of a swing, gave two important signs that the impending bullish breakout would not succeed. (See the manual Pivots, Patterns and Self Recognition for details). Then, just before the sharp and very profitable break to the downside, price action set up a very clean Fail Trigger Signal for a short-sale position. The trade was good for 100 points in the mini-Dow, 10 in the ES and 15 in the NQ contracts. (click image to enlarge)
A range high opening in the SMH gave comfort for taking a gap-close long position at the opening of the day. The swing up into the 1st Hour Transition Time was good for 11 pts in the NQ, 4.5 in the ES and 30 in the mini-Dow. But the exit signal to stop-n-reverse was far clearer than the opening long trade. A topping triangle pattern in the ES was a Sequel to an identical pattern in the NQ from the day before (see post from June 24, below). From there, the trend was down for the rest of day, pausing for a pair of consolidasting channels along the way. The short was good in the ES for 8 pts, and some 60 pts in the mini-Dow. But if you traded the ER2 or the Nasday, and you didn't leave for that Friday pm golf game at the Last Hour Transition Time, your short position didn't pay off at all. A bifurcated market ended the day with a sharp rally in the NQ while the Dow and ES kept selling--not occurence to be witnessed often--suggesting the larger trend rally has not come to an end just yet. (click image to enlarge)
After an early bear scalp off a Shoulder abc formation, the first real swing signal was about to appear. The signal was given by the SMH as it formed a Right Angle Declining Triangle that failed to break out at all, forming a Williams Squat reversal, right at the 1st Hour Transition Time. A Dough Bar confirmed the trend change. Too bad they don't trade futures on the SMH yet, but I'm informed it's coming soon! So the trade was taken in the NQ, the SMH's closet futures cousin, and was good for some 6 pts before hitting a series of opposing topping signals.
As the Noon Hour approached, a rare appearance of complimentary triangle reversal signals formed in the ES and NQ contracts. A fail trigger gave a second opportunity for trade entry, and the sell-off was on its way. The short was good for 4 pts in the ES, 8 in the NQ. To their credit, two good traders from the #emini chat channel caught this high with timely shorts using their oscillator divergence methods. But neither one stayed the course for more than a scalp's worth of profit.
But there are even bigger fish to fry from today's action than today's intraday trades. On the 60-min charts, a Two Frame Divergence appeared between the mini-Dow and the SMH. Although several of these have not yet produced a final high for this rally, this one is adding to the weight that the time is drawing near for a reversal of trend in the daily time frame.
(click image to enlarge)