Your objective is to think like the trader. What is this "guy" going to do? There are thoughts on this; some call it follow the money, or follow the institutions, etc. But it goes beyond that.
Your job is to observe what the market is reporting about past decisions by the trader, and then understand what that trader is going to do next. PA will clue you on this as it reflects the actions of the trader, and those action, within given conditions, can be reasonably predictable. Essentially, trade the trader.
The only thing better would be a job on the floor. Knowing the order flow and moving price for or against that flow is the definition of perfection, in terms of developing a perpetual money machine.
TODAY:
Market price action was declining since the Euro Zone open. It had short written all over it. But we saw the long opportunity, and defined it early.
[09:01] <Chartmaster> no long considered until 51-51.25 breaks
That key reflection point would be a key all day. Longs would launch from this point two more times today. Each time pushing for a higher high for the day.
Traders were looking for the HOD as early as 10AM when price was at 52-52.5. We were at a minimum HOD at 54.25-55.
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The long target hit, and was the first trade of the day. Remain long until the TL breaks, EMA breaks, or the HOD area hits.
The follow up trade is the EMA support. EMA not breaking, up bias day, no 5t challenge of the EMA( where price crosses the EMA or other recognized S/R by 5 ticks) which tends to be a trapping action. Traders will go long. We traded the trader.
A short when the EMA does break, and two additional trades at the key level, identified before the open, completed our trades for the day.
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The trades and the "why" are posted in our chat. Join us when you have a chance.
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