Jun 282010

Price only reached one potential trade area this morning, the overnight low.  As mentioned in the comments, the OL is an area to be careful today.  Being careful generally means wait for the first push into the key price level, then a rotation, and then a second push before taking a trade.  The tricky thing about the first push into the OL was that price came down and stopped one tick short before rotating back up.  So was this (the 9:35 bar) a good first push down?  In most cases, I would say yes.  The next rotation down (the 9:39am bar) tested the low and pushed through.  However the volume below the 1072 previous low was 676, too big for a little prints and not enough volume for traders to be trapped.  Th high volume for the bar closed in the middle, another sign that traders are not trapped.  Thus a decision needed to be made on whether or not to make this 9:35 bar as the first push into the OL.  The big lots setup made a long trade awfully tempting and if the high volume node was below the low of the 9:35 bar, I think I would have pulled the trigger.  The more conservative (and careful) approach was to make the 9:35 bar the first push into the OL and wait for a cleaner setup with better volume characteristics.  The next rotation down broke through the lows again but this time did not stop.

As I mentioned in the commentary, there is no real reasons for traders to search for new fair value and move the markets this morning.  Maybe later this afternoon we’ll get another push beyond the day’s high or low and another trading opportunity or two.

 Posted by at 12:41 pm

  One Response to “6/28/2010 Post Trading Analysis”

  1. Just for the record and to make those of you who took this trade and lost feel a little better about it: I had other biz this morning and didn’t trade any accounts. NJ didn’t like the level and neither did I from a handicap perspective but I think I might have traded it if I were in the mix.

    I didn’t mind the low print or the high volume position as it was only in the middle from “split hairs” as the other prices under were pretty similar. I read that there were plenty trapped actually, but I agree that they weren’t trapped low enough to keep out fresh “chasers” which is why it rotated back. Anyway, I might have taken a swing at it though as usual if I didn’t win it right then and there I would have bailed long before going out with a stop outside the swing so maybe I would have lost a couple ticks on it.

    It just goes to show how two guys on the same team can see things slighty different and why I insist on being structured the way we are. If I would have traded and lost a little it would have only been on half the capital. Thankfully I didn’t as NJ made the right choice. All in all, the handicap has to rule always. The level was weak mainly because of all that acceptance from the previous session providing a big black hole for price to fall into. It is nice to have multi-session rejection as a backstop and we had nothing under the OL. That plus sentiment was very weak. If it doesn’t feel right or make sense, trust your instinct and wait for the next one…

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