The US congress made a short term deal on the fiscal cliff yesterday by approving tax increases and kicking the can down the road on automatic cuts until March 1. So now we have 2 more months of potential volatility caused by additional government negotiations. The market liked getting something towards a resolution and gapped open strong in the post-New Years holiday pre-market. The cash market also opened strong, bouncing off the DTG 50.75 level early. The ES pulled back into the DTG 45.25 level and I was hoping to find an opportunity to get long with the strong up trend. Unfortunately, order flow didn’t cooperate and price pushed to new highs back in the DTG 50.75 levels. Price was having a tough time on the retest and the institutions were selling. It’s always tough to take a trade against a strong trend, but the order flow opportunity unfolded for today’s example trade.
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