Market Overview:
03/22/13: The US dollar index this past week showed signs of fatigue any time it pointed its nose above 83.00. As previously mentioned, 83-84 represents a significant battle zone for the index and its ultimate resolution ought to give investors a guide as to 'fear' vs. 'greed' expectations for the coming weeks and months ahead. Given this is Japanese fiscal year end, we may see trend resumption once on the other side of that event. Interestingly too, that event will mark the beginning of Q2'13 and we shall be given yet another brief glimpse at what fund managers are doing with their new capital. Elsewhere, the professor of economics (HG Copper) had something to say this past week. While still contained within a larger channel, Copper prices registered a weekly double top breakdown suggesting lower, not higher prices ahead. With that in mind I thought we ought to take a look at what is going on there in this week\'s WCTS Blog.
Weekly highlight:
The ill-liquidity of the Japanese fiscal year end has played heavily within the energy space. Volumes have dried up and volatility index's are at or near historic lows. Energy prices in general and energy stocks in particular started the week off on a poor note but attempted to reverse higher heading into the weekend. Indeed, USO itself registered a rare "DI' buy signal (where both the short term and medium term DI trending signals occur at the same time). Given this reversal type action and the fact that the '1st 2 weeks' study of Q1'13 suggested energy and commodities in general would do ok through the quarter, I am actually expecting a bit of a rally over the coming week. Considering May Crude oil's significant gap at 95.65, I shall be looking for that level to be traded to over the coming sessions. Considering too the general overt bullishness of institutional holding at the present, I wouldn't be surprised to see a burst higher through the first two weeks of Q2'13...
Trading
Strategy
(1 week):
BoT (Break out Trades) I am very comfortable working with my 15m charts and playing double bottoms & tops for moves to either 50% levels or OTE sweet spots. Ideally BoT entries come at or near hourly/4 hour OTE ss levels. The key with BoT's of late seems to be to only enter a position on a touch of the 13ema following the double top/bottom. Most trades take less than 10 ticks of heat and easily move +30 ticks in the trend's favor. So with this in mind, my trading strategy is to concentrate on BoT entries at or near hourly/4hr OTE levels. If this initial trade entry does not work and I still have confidence in the 15 minute price pattern, I will take my 2nd attempt at the trade at the OTE ss (level with stops 4 ticks below previous significant low). The end reult of this second attempt will mark the end of my trading day regardless. I will finish the day either +$140 (+30 stop hit), +$250 (AOCO +41 hit) or $-310 (personal loss limit hit). I want to focus on 5:30AM to 8:30AM trading window and take every setup that occurs during this window of time.
BoT (Break out Trades) I am very comfortable working with my 15m charts and playing double bottoms & tops for moves to either 50% levels or OTE sweet spots. Ideally BoT entries come at or near hourly/4 hour OTE ss levels. The key with BoT's of late seems to be to only enter a position on a touch of the 13ema following the double top/bottom. Most trades take less than 10 ticks of heat and easily move +30 ticks in the trend's favor. So with this in mind, my trading strategy is to concentrate on BoT entries at or near hourly/4hr OTE levels. If this initial trade entry does not work and I still have confidence in the 15 minute price pattern, I will take my 2nd attempt at the trade at the OTE ss (level with stops 4 ticks below previous significant low). The end reult of this second attempt will mark the end of my trading day regardless. I will finish the day either +$140 (+30 stop hit), +$250 (AOCO +41 hit) or $-310 (personal loss limit hit). I want to focus on 5:30AM to 8:30AM trading window and take every setup that occurs during this window of time.
Revised trading plan with short term filter: As per my revised trading plan (trading plan April, 2013) I now shall consult the 3 minute chart before 'pulling the trigger'. If the 3 minute chart has yet to turn then I shall wait before blindly buying/selling at either Setup 1 ('edge') or Setup 2 (OTE SS). This may mean being a bit more patient in getting in but I like the idea of the 3 minute chart confirming short term momentum and volume are with the trade setup. I was finding just blindly buying at a certain level left me with a lot of anxiety and using this latest filtering method on Friday both filled me with confidence and relieved that anxiety.
Mental
State
Review:
While I believe I am ready to take the next step my trading of the past week does not confirm this. I need to be more focused on executing in the setup zones and not making excuses to not perform. The plan is good and I know it works - trade the plan...
That's
all for this post, While I believe I am ready to take the next step my trading of the past week does not confirm this. I need to be more focused on executing in the setup zones and not making excuses to not perform. The plan is good and I know it works - trade the plan...
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/
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