TRADING ELEMENTS

Elements is a term I coined for all the items added to a chart that "tell a story."  The story is how we plan to trade the market  to maximize the trade return, and also to seek trades that have a high probability of being successful.  Being able to read the market brings about positive trades.  Positive, and more positive.  For many of you, following this blog has confirm this in your own trading.  For you, plans are being developed for the live presentation.

Elements in the charts will include the candles, but it goes beyond just the candle patterns.  It includes the EMA, trend lines, channels, and the buy and sell breakout points.  We need to know if  they are positive or negative, and is price breaking one or more of the elements.  The more elements involved, the higher out expectation that the trade will be successful.

TODAY 6E:

One word:  WOW.  Some of these are super runs of 50+ before they "violate" the story.

THE STORY:

Points 1 and 2 are the early A.M. long and short breakout targets.  We have a declining TL and EMA.  The 7:35 bar fails at the TL and the EMA, and crosses the BOS for the short.  Our exits are 5-20 points.  But from a strictly story approach, your exit would not occur until the TL (aggressive) or the EMA (conservative) is breached.

Bulls run back to the #2 level and fail, setting up another shorting event.  We will look for longs breaking above 2, and shorts below it.  Earlier, had price rose to #1 and failed, we would be looking for a short.  A BO is the long or short.  A failure is the opposite side trade at the target.

The double bottom was a long signal for many, and certainly once #2 broke.  Visually, you should see a rising TL just above the EMA, from the DB to #2.  By the story, hold the long until the break of the TL or EMA, or if Target #1 fails.


TODAY:  ES

You need a double take when looking at the ES and 6E.  Both had an early A.M. break of the sell target (#2), a declining TL (#3) and EMA.    Es even had a bull run back to #2 that failed.   For the 6E and the ES, shorts were entered at the first break of the BOS #2, and at the second hit that failed.

The BO targets were established early today for the 6E and ES, and both were used to generate successful shorts.  Per the story, the ultimate hold would be until the TL or the EMA is threatened.

#4 was a mid trend failure at the 25.50 area, and is important to a later trade discussion.  #6 is the next bullish channel.  A channel  can be a short at the top, and long at the bottom.  I prefer the bottom entry for the bull channel, and the top for a bear channel.

#7 was a W push.  We had two pushes, and the feeling was we would have a third going into the 25-26 area.  this is where #4 came into play.  Price pushed into the same area as the mid trend failure.

The failed channel BO at b63, combined with the b64 engulf, allowed longs to enter.