Afternoon,

Wow! What an awesome day. The FED opened the liquidity gates and the market went wild. The DOW was up over 400 points at the end. Russell 2000 opened up 18 points at the 161% Fibonacci level and proceeded to trade lower for the first 45 minutes. Here are the charts for the first and second half of the day.

First Half Chart

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Second Half Chart

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Trade 1 and 2 were bobber set-ups. Since the market opened at the 161% fib level, these set-ups were valid even though they were above the 56 EMA. The market was trending strongly (down) at the time. The market then traded sideways in a wide range for the next 2 hours before breaking a trend line to the down side. There was another bobber set-up right at the 56 EMA.  Here is the chart for the first three trades.

Trades 1, 2 and 3

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The market continued down until finding support at the 161% fib level.  It rallied strongly, passing through the 56 EMA and breaking a trend line to the upside. The price pulled back to the trend line it just broke and formed a ideal trader’s trick set-up. Eventhough the set-up was ideal, the trade was not and stopped out for a 2 point loss. Usually, when a trade stops out, the next trade makes money. The market turned around immediately and had a bobber set-up below the 56 EMA. As stated above, the trade made its objective in a matter of seconds. The market continued down but did not take out the previous low before turning back up. If a previous low is not taken out, it usually means that the market is changing directions (I plan on making a post about market flow analysis in the near future…stay tuned). Trade 6 happened after a trend line break above the 56 EMA followed by an ideal trader’s trick. My absolute, no fooling, gotta learn this set-up trade. Notice on the below chart how the price broke the trend line right at the 56 EMA followed by a pull back to the trend line it broke. Those trades around the 56 tend to have less risk because support/resistance is close by. Kinda cool, huh? Here is the chart for trades 4 ,5 and 6. (Just noticed that the chart says 4, 6, and 6. Sorry for the typo!).

Trades 4, 5 and 6

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Trade 7 was a trend line break above the 56 EMA followed by a trader’s trick set-up and that trade was followed by trade 8, bobber set-up. Often times, if the trend is strong, there will be back to back trader’s trick set-ups followed by a bobber set-up. Here is the chart for trades 7 and 8.

Trades 7 and 8

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After the trade 8, the market rallied strongly and then finally pulled back giving a trader’s trick set-up. This was a little different than normal because the pull back happened after quite a few bars had passed. The pull back was orderly and happened at the 40% fib level so made the trade more valid.

Whew! I guess that about does it. Today, there were 9 valid set-ups. There were 8 winning trades and 1 losing trade for a net profit of $1,400, ignoring slippage and commission. So after a difficult week last week, this week seems to be improving. It is kinda interesting that the market goes though hard to trade times and times that are easier. That is just all part of being a professional trader.

Here’s to great fishing!

Best regards,

Ron

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