Dragon, Double Bottom and ABC Bullish Patterns with Market Context

December 21, 2012 · Posted in ABC Bullish, Double Bottom, Dragon, Fib. Zone Pivots · Comments Off on Dragon, Double Bottom and ABC Bullish Patterns with Market Context 

ABC is one of the most universal pattern. This pattern is the most simple pattern but very powerful as it is part of at least 10 other patterns like Gartley, Butterfly, Double Bottom/Tops, Dragons, H&S and Inv. H&S etc. In Double Bottom patterns, the two bottoms are never really equal and may have 5 to 8% difference in their depths. So, these Double Bottom patterns also form Dragons with distinct hump and two legs. Both these patterns have ABC
embedded in it. The confluence of these patterns gaves a great opportunity to trade from Long side using ABC as a guide.

Today ES sold off from overnight on fiscal cliff news. ES traded about 50 points down overnight but recovered 30 points at the open. This morning I was patient to develop any potential patterns to trade. Around noon, I started noticing price is entering into the extreme Support Zone (Fib. Zone Pivots) of 1415 to 1418. Fib. Zone Pivots do provide great support and look for any patterns to develop to trade. Around 12.50pm, I noticed price is forming a double
bottom pattern in the FZP and started to breakout. This pattern also has Dragon setup with a smaller ABC inside. Trading these patterns strongly supported by the FZP is an excellent opportunity. I also watched CMI and other VLTY. VLTY is safely below 50 and CMI3 was green and CMI5 was nearing GREEN setup.

ABC Bullish pattern signaled EL (Entry Level) at 1419 with a stop at 1416.5. Targets were 1421.5, 1424. Around 1pm I entered a Long trade at 1419 with a STOP at 1416.5. At 2pm, I exited my trade at 1421.5 (+2.5) and 1424 (+5 pts).

An Exercise in reading Market Context and ABC Bullish Pattern Trade

December 17, 2012 · Posted in ABC Bullish, Fib. Zone Pivots, Market Structures, Point of Control · Comments Off on An Exercise in reading Market Context and ABC Bullish Pattern Trade 

S&P Eminis (@ES) developed a Globex range (overnight) of 1409.25 to 1417.25 and started drifting lower at the open. At 9.30am, I was looking at ABC bullish pattern strongly trading over Mid Fib. Band and 200-SMA. Reached its first target 1416.25 (over night). I did not have this opportunity as it developed ABC pattern and reached 1st target overnight. Strong ABCs usually gives second opportunities from with strong market internals. One of the first reading I look is Market Context and where the ABC was developed and how current Pivots (Floor, Globex and Fib. Zone Pivots) are in relation to Fib. Bands and 200-SMA. This gives a pretty good idea of Market Context and how I should play. Also needed to look at Volatility to see it is safely tradable.

At the open 9.30am, ES started drifiting downwards and entered into the tradezone (EL to Stop) 1412 to 1409.25. Also, price seems to be strongly supported by VAH (Value Area High: 1411.75). Another context reading was, there was a small ABC (3) was developing inside the larger ABC (5) giving cluses of potential breakouts. This is an excellent trade setup. My plan was to wait until it trades at or supported by VAH (411.75) and then rises over pHI
(1413) and R1(1413) cluster. Smaller ABC entry was 1413.5. I also thought if ABC does pickup momentum, it will reach next Fib. Zone Pivots Ranges (100% Resistance area: 1416.75 and second FZP Resistance Zone (1419.5 to 1421.25).

Market VLTY at the open was above 50, but nearing 50 and may drop below as price starts to settle. If price crosses above 1413.5, ABC Bullish setup will take it to 62-79%. With 2.5 to 4 pts targets and 2.5 pts stop is well within my Trade plan.

So, my entry was set at 1413.5 (above pHi/R1 Cluster). STOP was derived from this logic. Larger ABC stop is at 1409.25, but if price starts to decline below 200-SMA and this trade and ABC may be influenced by negative momentum. So, I placed my stop safely at 1411 (-2.5 pts). Targets are derived with Price confluences of ABC 62%AB at 1416.25 (+2.75) and 79%AB at 1418. (+4.5).

My ABC Bullish Long trade from 9.36am to 10.10am worked out well and I am out of trade at 1418 with 2.75 and .4.5 pts profits. At 10.30am, Price retraced back to 1414 level.

I still think price will reach FZP Target range some time today (1419.5 to 1421.25). But I will wait for another opportuntiy with some positive price-action to
trade.

Fib. Zone Pivots

January 30, 2010 · Posted in Fib. Zone Pivots, Floor Pivots · Comments Off on Fib. Zone Pivots 

Jan. 30, 2010

One of my pre-market preperation is to figure out market context. I spend about 30-60 minutes reading my trading charts pre-market every day. I open TradeStation and start reading @ES/@YM/@NQ charts in 1220T, Daily, 30m charts to understand how market reacted in the last few days, where the new highs/lows were made, how it closed in the last few days. This preparation is part of my visualization technique and focus on various price action elements.

Pivots play very crucial role in the markets. Knowing when/where/how they act/react adds to traders knowledge/success.

Pre-market, I watch Two type of Pivots: Floor Pivots and Fib. Zone Pivots.

Fib. Zone Pivots concept was popularized by Robert Krausz and was also written by J.T. Jackson in his book. Eventhough their research involved of knowing various statistical trading zones concepts for various times of the day, I limit myself to just using Pivots as key support and resistance areas. I think knowing where the extreme Fib. Zone Pivots exist will be greatly helpful in trading.

In the following chart, I plotted Fib. Zone Pivots on @ES 30minute chart and highlighted the areas where each day how price bounced off. Fib. Zone Pivots indicator automatically plots these levels from yesterday’s Open,High,Low and Close and the Pivots, FZPivot Bands remain all day.

For example On Jan. 27th, Price bounced off FZ62% level (1082) to rise to 1103 level following day. On Friday, Jan 29, the Globex Low was made within the FZBand (1070.25-1066.75) and price returned and closed to inside the band (1068.75) by End-of-Day.

FibZPivots_Jan2910

Globex Pivots
Fib. Zone Pivots