Afternoon,

Well, so much for follow through. Today was another difficult day to trade. The first chart shows the side ways base that the day started with. Here is the chart.

Side Ways Base

Click on chart to enlarge.

The market finally broke to the upside but with no entry. The market finally broke to the down side and there was a potential trader’s trick set-up. There was a trend line break and the short entry was right above the 56 EMA so the trade was not valid. There was another trader’s trick after a trend line break with a short entry of 719.70 at 13:39 pm CST. Here is the chart for trade 1 and the potential trade.

Trade 1 and Potential Trader’s Trick

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Afternoon,

The market was held a bay for most of the day until the FED announced that they were holding interest rates steady. Here is the chart for the day.

Chart Of Day

Click on chart to enlarge.

The only trade of the day came after the rate decision. There was a trader’s trick set-up after a trend line break above the 56 EMA. The time was 13:54 pm CST with a long entry of 716.60. The trade took 1.70 points heat before making its objective. Here is the chart for trade 1.

Trade 1

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Afternoon,

I have been using the value area for some time and thought it would be good for me to write a post on how to use it. First, the value area is the area where 70% of yesterday’s trading took place. Why is that important? Because the bigger traders use the value area and as a smaller retail trader, knowing that can make the difference between being profitable and not. There is some terminology that a new “value area” trader needs to know.  

• Initiating Activity: When the market opens above (or below) the value area and does not get inside the value area.
• Initiating Buying: When the market opens and stays above the value area, this is a strong bullish signal. When this happens, you have dealer and institutional buying going on in the market. When the dealers and institutions are long, you don’t want to put on a position opposite of what they are doing. The best chance to profit on a day like this will be from the long side. Buying breaks (dips in the market) to get long will be the best strategy. In fact, I would say that when the market has opened above and stays above the value area, you should be afraid of being short.
• Initiating Selling: When the market opens and stays below the value area, this is a strong bearish signal. When this happens, you have dealer and institutional selling going on in the market. When the dealers are short, you don’t want to put on a position opposite of what they are doing. The best chance to profit on a day like this will be from the short side. Selling rallies to get short will be the best strategy. In fact, I would say that when the market has opened below and stays below the value area, you should be afraid of being long.
• Activity: The opposite of initiating activity. When the market is above (or below) the value area and does get into the value area.
• Responsive Buying: When the market opens below the value area and buying starts coming into the market (in other words, the market starts moving higher when it is below the value area.) Buyers are “responding” to the market being below the value area and they are attempting to buy the market cheap, thus pushing the market back towards the value area.
• Responsive Selling: When the market opens above the value area and selling starts coming into the market (in other words, the market starts moving lower when it is above the value area.) Sellers are “responding” to the market being above the value area and they are attempting to sell the market at higher prices than yesterday.

The Top and Bottom of the Value Area are

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