When price breaks a BOT we look to trade in that direction expecting a trend. When the PA fails, the focus switches to the reversal trend. When a BOT fails, it is believed that price will run to test the opposite BOT. This was our focus today: play the reversal and shoot for the long BOT.
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The market was in a bear channel coming into the pre open, testing then breaking the short BOT. We have an early 50% level -63.75-created on the control bar 103, very near the bottom TL of the channel and the short BOT. Bars 104-105 creates a MAXT which is a reversal signal, and eventually become one bookend for the trading range.
Some of the events discussed in our webinar today:
- the BO of the channel and the short BOT with a key level at 63.75 established.
- MAXT reversal signal.
- the key level was a short to the MAXT level, and a valid long for the reversal.
- conservative long was the BOT reversal at 64.5, with another long valid at the 50% level b3 and the upper TL of the bear channel.
- trend exit targets are +5 and +10 (see trading log on the webinar page)
- at the mid BOT we see a flag. We added a 5t +/- to the mid BOT, and see that price continued to test the high 5t. Flag BO will determine the trade, and it worked with the long 5t.
- price hit +10 from the low and the key level at 63.75.
- the high hits and forms a MAXT, the other bookend.
- the MAXT is a reversal signal, and we drew an ellipse target, thinking price and the EMA would meet. It did.
- at the target, there was no 5t failure, and we have a HL long setup back to the MAXT top.
- in the PM, we have another setup at the 50% level (between the MAXT and long BOT). There was no 5t failure, and it is a long ending at another MAXT.
When looking at a trade, the setup should have a story to support your entry. We have the long BOT support, at the 50% level, no 5t failure, and we see the other markets making a move at the same bar zone, suggesting the professionals will move the market in our direction.
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