Tuesday, May 22, 2012

/TF Tops: You just got zuckerberged!

First, here's the 15 min candle chart that would alert any astute trader where /tf might be entering a heavy supply zone.

Around 10:20 am - /tf was on a roll.  But the 15 min. chart above shows potential supply.  Given that the daily charts are sloping downward, one should certainly be thinking a pullback is possible.  However, in order to safely avoid getting whipped and avoid the psychological pain of waiting forever for a drop, the next step is to look for bearish indicators on the 1-min chart.

And here's what we see:

The first thing I observed was the Puke Candle at 10:20 am.  However, I have added a new indicator -- quite simply, called the Dump Candle.  Just because price was rejected at the highs, does not mean the market will selloff.   At 10:43 a big volume sell candle printed so this suggests there are bigger sellers getting out.  But still, no pattern to work with.

At 11:11, another Dump Candle prints.  This is FIFTY minutes after one has already determined we are probably topping out... and here we are, still waiting for confirmation.  Patience is a virtue.

/tf began climbing up once again but this time, note the lace of volume.  At 11:28, it is possible to draw a descending trendline (3-bump pattern) touching 3 points.  Here at last, is the ideal short entry -- risking no more than 8 ticks.

Needless to say, this would have worked.  /tf went on to drop over 100 ticks from this point... with less than 5 ticks heat.   (70 ticks within half an hour from entry.)

In fact, a trader in a chatroom I frequent (stockguy22.com), rode /tf for nearly 130 ticks.  Real traders are making these trades.  And they're not predicting or thinking.  Just executing a plan. 

If you are struggling and looking to improve your futures trading, just keep studying and observing and writing.  This set up is nothing new to this blog.

I hope you had a good day and didn't get zuckerberged like some probably did.  If I can accomplish one thing on this site, it will be to spread the use of the word 'zuckerberg' as a verb.  I think we all know what it means.

See you tomorrow.  Oh, and if this post helps, all I ask is that you send a link to someone you know.  Sharing is caring.

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