Monday, May 7, 2012

Enter Break of Higher Timeframe.

oil was on a 2 day plunge -- gapping down to 95.35 on Sun. morning.

 As the day progressed -- a clear downtrend line formed on the higher timeframe 15 m. candles...

Market Signals improved quickly with most sectors green and EWP, EWI up over 2%.

Eventually the TL broke and this changed the picture -- one should attempt a long here as oil could easily climb on short covering with no clear resistance for a while.

 As it turned out -- /cl moved about 80 ticks at best... before double topping, then triple topping -- a clear signal to exit.  Either way - this trade would have provided a strong daytrade with about 8:1 R:R.

Key concepts:

1) Identify a clear trend on a higher timeframe.
2) Monitor Market Signals for market direction
3) Look for a 3 bump pattern or breakout pattern after the TL has been broken.  (In this case, one could vaguely make a case for a triple bottom as the TL was broken.

4) Set a tight stop as this breakout pattern should work immediately.

Timing is indeed everything.

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