ny journey is normally predetermined with some planning (what time is my bus, flight, train?, what time should I leave home, hotel?, where will I get fuel, accommodation, meals etc).
All sensible trading should have similar plans, and back up plans.
Lately I have noticed considerable ES activity outside US trading hours. This must scare some traders when they are spilling their morning coffee, and they see their long/short is 150 pts against them and their market hasn't even opened!
So today I thought I would share my plans for my oil journey.
Of particular note are three visible patterns: The ascending (flat topped) triangle at $66 (Resistance), the rising chanel, which we have been trading of late, and the Support line at $63.
Ascending triangles are considered consolidation patterns. They normally like three or more hits (about 2/3 length) before penetration, BUT it is NOT a triangle until after it has broken out.
In our case our lower channel boundary is the upward sloping radian, and the intersection occurs late May.
So we will buy on:
Pullback to our support line at $63; and/or
the lower upward sloping radian (between $62 and $63 until Apr 20).
Beware this date - it is Contract Expiry (CL1! ... rem this chart is CL2!) so expect churn during the preceeding week.
Our Stop is the swing Low of Apr 6 - a few pts below (say) $61.70
Post Apr 20 our Stop will sit a few pts below our $63 support or any higher swing lows that occur subsequently.
Our initial target is overhead Resistance at $66
Our Risk Reward becomes (66-63):(63-61.70) or 3 : 1.30
Watch for a coil to reverse a low on an incomplete retrace towards the lower channel line.
Upside breech and close above this Resistance then puts the triangle in play. Normall breech is followed by a pullback retest of the break out price.
So we would buy $66
Stop will be any swing low close below this breakout price
Target becomes the Resistance - radian low + Resistance (66-58)+66 or $74 but lets gets the break out first then we will concentrate on the next leg of our journey.
All sensible trading should have similar plans, and back up plans.
Lately I have noticed considerable ES activity outside US trading hours. This must scare some traders when they are spilling their morning coffee, and they see their long/short is 150 pts against them and their market hasn't even opened!
So today I thought I would share my plans for my oil journey.
Of particular note are three visible patterns: The ascending (flat topped) triangle at $66 (Resistance), the rising chanel, which we have been trading of late, and the Support line at $63.
Ascending triangles are considered consolidation patterns. They normally like three or more hits (about 2/3 length) before penetration, BUT it is NOT a triangle until after it has broken out.
In our case our lower channel boundary is the upward sloping radian, and the intersection occurs late May.
So we will buy on:
Pullback to our support line at $63; and/or
the lower upward sloping radian (between $62 and $63 until Apr 20).
Beware this date - it is Contract Expiry (CL1! ... rem this chart is CL2!) so expect churn during the preceeding week.
Our Stop is the swing Low of Apr 6 - a few pts below (say) $61.70
Post Apr 20 our Stop will sit a few pts below our $63 support or any higher swing lows that occur subsequently.
Our initial target is overhead Resistance at $66
Our Risk Reward becomes (66-63):(63-61.70) or 3 : 1.30
Watch for a coil to reverse a low on an incomplete retrace towards the lower channel line.
Upside breech and close above this Resistance then puts the triangle in play. Normall breech is followed by a pullback retest of the break out price.
So we would buy $66
Stop will be any swing low close below this breakout price
Target becomes the Resistance - radian low + Resistance (66-58)+66 or $74 but lets gets the break out first then we will concentrate on the next leg of our journey.
From here the trading becomes clearer if we stick to the pattern rules.
Long/Cover on touch close above $66. Stop trade close below $65.90
This is our ascending triangle upper radian.
Short/Close on touch close of rising channel line at $68
We will simply trade the channel until it breaks.
There is circa $2 in this channel width so with 10c stops either side, it is a handsome "Risk : Reward" ratio.
... just a 2c update