Afternoon,

Well, finally, a trending day. When you take a look at the chart below, the first thing that  you will see is that  S1, S2 and the Pivot are very close together. At first blush, that would seem to be a difficult day to trade with the distances between those areas so close together.  But the market gaped slightly down and presented us with a bobber set upright below S1. Entry was on the 8:45 am bar with an entry of 710.80. With S2 at 709.50 (1.30 points below my entry), I decided to take the trade with the idea that if price slowed or reversed at that area, I would move my stop to, at worst, break-even. As you can see that the price did not even slow down at that  area. Notice how price came back to S2 and turned down again. So with S1, S2 and the Pivot all above the price and the price below the 56 EMA, all that we were looking for was another short entry. That came after a trend line break followed by a trader’s trick set-up. The entry bar was at 10:42 am CST with an entry price of 708.00. The first support area was the 1st hour low of 705.80 so the trade was good to go. Here is the chart for trade 1 and 2.

Trade 1 and 2

Click on chart to enlarge.

Price came crashing down through the 1st hour low, breaking the 127% fib area, and the the 161% fib area followed by a bobber set-up at 11:39 am CST with an entry of 699.40. Breaking the 161% fib area is an extremely strong support/resistance area and breaking of that area is significant. There was a bobber set-up right below the breaking of the 161% area. Entry was on the11:39 am CST bar with an entry price of 699.40. Since the next support area was the 261% fib area at 691.64, the trade made sense. A quick note about breaking the 161 % fib. As I stated above, breaking the 161% fib is significant. I have not seen that area broken very often and it usually is associated with an event or news or something like that. The reason that the market sold off here was oil hitting $119 a barrel and the slow housing numbers. Any way, that is a little back ground about why it made sense to take that bobber trade. Here is the chart for trade 3.

Trade 3

Click on chart to enlarge.

The market then had a nice, very orderly move to the upside followed by a trend line break to the downside. There was a trader’s trick set-up on the bar at 13:12 pm CST with an entry of 700.00. The trade was up .80 pts and then down 1.00 pts before finally reaching the objective. Trade five was a trend line break to the upside followed by a trader’s trick set up. Entry was on the bar at 14:21 pm CST with an entry price of 701.50.  The trade took 1.50 pts heat before making the objective. Notice on the following chart how price came back to touch the trend line that it had just broken. Here is the chart for trade 4 and 5.

Trade 4 and 5

Click on chart to enlarge.

As I have been saying in recent post, this (and most) strategies require the market to be trending before the signals work well. Today was a perfect example of a trending market in action. Today, there were 5 valid set-ups and all 5 were winners for a net profit of $1,000, ignoring slippage and commissions.

Days like today remind me of why I like to go fishing in the markets. Kinda puts all of the frustrating days of the past week in perspective.

Have a great evening.

Best regards,

Ron

This is not a solicitation to buy or sell. 
There is a risk in any investment