Price analysis you see is CLZ12, for the week of November 2nd, 2012:
Market Overview: In what can only be described as a classic 'buy on the rumor, sell on the news' event, the pre-election rally (on the hopes of a long shot win by the GOP challenger & a promised tax cut) not only cleaned out many weak shorts but also relieved a rather over-sold market condition. The subsequent price failure not only took back the rally but also broke to new lows in many cases. Meanwhile, the very noticeable bottom in the US dollar index continues to build as many of its major trading pairs are looking rather weak compared to the greenback. What is most interesting to me, is how quickly the major media outlets have switched their attention from all out election blitz to the impending 'fiscal cliff'. Indeed, as I have been worrying about for a while, we ought to see some sort of climactic capitulation around that event. Having said that, the event itself is a little over two months away and given the fact that the public is paying attention (and selling into the media frenzy), it wouldn't surprise me to see a bit of back filling through this seasonally bullish time of year.
Weekly highlight: The significant run up in price prior to the election broke the recently registered bearish ab=cd price pattern. The subsequent failure of price through the previous lows (84.22) registered a new bearish ab=cd price pattern. This violent price action not only ran a lot of 'weak' hands out of the market, but also established a very wide (over $5.00) trading range. Should either side of the range be broken in earnest, an equally violent $5.00 move could be seen after the break.
Trading
Strategy (1 week): Given the rather well defined double bottom that was registered following the post-election collapse, I shall be looking for the market to move higher through this week to ultimately test the pre-election highs just under $90.00. Should price move through Friday's highs (86.77) that move may come quickly. Should price break Friday's pivot low (85.28) I shall look for the lows of last week (84.13) to be tested. should that bottom be broken, a range extension down into the daily/weekly bearish ab=cd targets (around $80) would be my next target zone. As pointed out on the 2 hour chart above, the current trading range of this market is over $5.00 and could move to either extremes on a very short notice....BE CAREFUL...
Mental State Review: This is a very hard part of the process of becoming a live day trader. I am not at the beginning and I am not at the end. I am in the middle and need to maintain focus to ultimately achieve my goal. There are many reasons to quit but I shall not. Having said that, I am very frustrated in myself and why I can't make the leap to acting accordingly on a daily basis. In very much the same fashion of late, I seem to start the week off well only to finish over trading and racking up big losses. I have printed off a list of common mistakes I make and will endevour this week to review the list before making a trade. Lets see how that goes.
Mental State Review: This is a very hard part of the process of becoming a live day trader. I am not at the beginning and I am not at the end. I am in the middle and need to maintain focus to ultimately achieve my goal. There are many reasons to quit but I shall not. Having said that, I am very frustrated in myself and why I can't make the leap to acting accordingly on a daily basis. In very much the same fashion of late, I seem to start the week off well only to finish over trading and racking up big losses. I have printed off a list of common mistakes I make and will endevour this week to review the list before making a trade. Lets see how that goes.
Trading
Plan for this coming week: Watching for and using 'OTE' setups
to identify buying and selling opportunities at key
support/resistance levels on the 60m/4hour charts. Once trade zones are
entered, drill down to 15m/5m for OTE entry points (coupled with
momentum/volume divergences) and follow the trade process.
Picture
everyday my ideal trade....looking for momentum divergences at or
near OTE zones on 60M/4hr charts; tight reversal, clean additional OTE
entry signals on shorter time frames where tgt is +.42 and stop is
-.21....I have come to see that profitable day traders do not always
have to trade....so there simply is no hurry. Trades they do enter are
ideally looking for a 'range extension' in the opposite direction.
While trading 1 lots does limit this participation, consistently
shooting for +41 tick trades (while risking $215/trade) seems like a
realistic target/goal for the $30,000 ($500/day max risk) combine
account.
Trade
Process: Once 60m/4hour OTE sweet spots are entered and market has
confirmed vol/mom divergence, b/s 1 aoco (-.21/+.41) at 5m OTE entry
levels where prev. peak (+/-.10) is no greater than 21 ticks....Either 2 initial losses ($-430) or three wrong trades in a row (-$645.00)
equates to end of day (Very hard to do!). Gains of more than $1000/day equates to end of
day - and a big pat on the back.
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/
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