5.15.13 – Timing is Everything

Big Pic

Big Pic

It didn’t take many indicators today to sit and wait for the proper entry.

My method is simple.  I wait for the 25m Open Range to setup (perhaps even a chance to see if we will close the prior days open gap based on ema X-OVR. if we go in that direction). I confirm on the breakout above the range for at least 75% of the bar to be above. If not, I wait on the second bar and confirm on my Heikin Ashi bar 10 tick range chart. If this lines up, I check market internals. If this confirms direction, I check to see if I am out of the gap pivot zone. All looks good? I check the nearest resistance or support and enter the trade.

Upside Confirmation

Upside Confirmation

This is what kept me out of the 1st hour chop. It wasn’t until post 1 hour market open that I took a trade above the Monthly R2 and1 hour open range. The next hour price action hit a high at Camarilla H4 level and never broke above the remainder of the day. This was my one trade. What kept me in the trade? My trade setup was confirmed on market internals, momentum above the range and resistance at monthly R2. Heikin Ashi candles remained in trend above the 5/34 EMA.

Everything that may have said we are going down today from the open, just didn’t pan out. Your econ data for the day was not the greatest of reports. Housing market index was just up slightly. Prior market close was calling for the bears to step in and take this market down. My-2-sense. Shut the TV off and be patient for the setup, whichever direction it comes.

It was tempting to enter from the market open just based on the 5/34 EMA crossover, however not the best of setups considering market internals were flat to down. However, I stick to my plan,enter on my rules and manage the trade in whatever direction we are trending.

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Lets take a look at the play by play of the market open that kept me out of the chop.

Market internals were weak.  

ADVN/DECN

ADVN/DECN

Breadth

Breadth

$TICK

$TICK

——————————–

Market Open

Market Open

A: Price action was choppy. Waiting for 25m Open Range to set.

B: 25% of Bar closes above 25m open range. 

1: Heikin Ashi Bar on 10 tick Range chart is in trend with strong upside long signal. 

Decision: NO entry. Inside Daily Gap/Pivot zone. Will wait to clear Daily Gap and be above 25m open range

C: 2nd bar above 25m Open Range closes – 100% of bar – good signal. Daily/Open Gap is closed. Heikin Ashi bar not moving up. Market internals weak.

Decision: NO entry. Above Daily Gap/Pivot zone. Will wait to clear Daily Gap with Heikin Ashi bars in trend

D: Price action turns and doesn’t break the high since the open for another 25m

2: Heikin Ahsi bar is trending upwards but does not have a 5m bar closed above Daily Gap. Majority of bar on 5m chart is above 25m Open Range

E: Criteria looks good. Strong 5m candle above 25m Open Range and daily gap. 

1 Hour

1 Hour

Decision: Market internal were still weak. Price action was closing in on Monthly R2. Will enter ONLY on solid bar above Monthly R2, Close above 1 hour open range and Heikin ashi bar in trend

F: Bar closes above Monthly R2. 

3: Heikin Ashi Bar on range chart in trend on upside long signal

Decision: Market internal turned upside. Criteria met. Enter trade on multiple contracts. First target at weekly R2/Daily R1 – 988.4. Watch the Heikin Ashi 5/34 EMA chart to keep me in the trade. 

Results: Target hit at Weekly R2/ Daily R1. 1/2 contracts off. Move stop to B/E. Next target at fib level 900 and Camarilla H4 990.6. Targets hit. Nest target would have been Daily R2. Heikin Ashi trend turns short and fades to 25m Open Range high.

———————————————–

Supplement charts 

Camarilla Levels

Camarilla Levels

Daily Action from L3 to H4.  Used H4 as a target – was high of the day

5/13/21/80 EMA

5/13/21/80 EMA

4 EMA (5/13/21/80) from the market open. The 5ema never crossed the other three which keeps you in the trend. If your stop is wide enough, earlier entry is viable.

25m OR - 5m Chart

25m OR – 5m Chart

Entire days price action from the AM chop to breakout above the Open Range to Cam H4. Price fades to top of 25m Open Range and settles right above at Monthly R2

Fib Extension

Fib Extension

Place a fib extension on price action with market strength – 161.8% fib level is usually an entire move. Just another tool in my toolbox.

Last hour

Last hour

While I was content with my 1 trade for the day, 1 may ask why I didn’t take any others. Until price action breaks the trend (5/34 ema) out of the 25m Open range, I will remain in the trade. So what happens if price comes back down like it did today to the 25m Open Range? Price action on the 5/34 ema never crossed until the last 5 minutes with any conviction. No trade time for me unless the trend has been all up for the entire day.

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