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.

Trading Elliott Wave using ABC Pattern

July 29, 2010 · Posted in ABC Bullish, Elliott Wave, Market Structures · Comments Off on Trading Elliott Wave using ABC Pattern 

It is never easy to detect an Elliott Wave Pattern. Every EW theorist has his own rules. Usually it is NOT my style of trading EW as I am not actively looking for it. Many many years ago, I got interested in developing EW program for TradeStation and I learnt for few months of its build, various rules and its nuances. Coding was a new challenge as it constantly adjusts and re-adjusts with various arcane rules. This process took about 6 months for me to understand and code various rules, but finally realized I may never be able to completely write the EW algorithm to my satisfaction. Hence, I abandoned the EW project but I learnt quite a few patterns in the process. Even though I do not look for EW actively, time to time, I do find the EW waves and I trade them from ABC perspective. Today was such a day in ES 1220 Tick chart… Here is how it worked out as I initially traded only ABC pattern.

Today ES Sold off from the high of 1112.5 to 1088 by noon. Most serious drops have some retracements as Counter Trend moves. The first bounce from low was at 1088 to 1094 area (6 pts) signaling potential AB leg in the ABC pattern. The retracement (BC) leg was about 4 points to 1090 area with 76% AB length. See EW01 figure. Note Pivot (A) was also marked as ‘Market Structure Low’. Having (A) or (B) or (C) as Market Structures adds additional confirmation for the ABC Pattern. The entry trigger into the ABC was at 1092.75 with targets between 1095.25 and 1096.75. A Stop loss is set at 1090 level (C). Once the AB reached its targets (See Fig. EW03), I was thinking it may see its reversal at 1.62AB level (1098.5). Then it also occured to me that this may be an Elliott Wave pattern with Wave3 (start at 1090 and ending at 1098.5).

Around 1.30pm ES reached its 1.62AB Target (1098.5) and start to reverse. Now, for EW to continue its formation, the 4th wave should end above 1094 level (B). About 2.11pm, the 4th Wave formed just above (B). See EW5 image. Now EW should form 5th wave from 1094.5 level to (1102.75-1104.25 which is 76-100% of Wave3 range. See EW06 image.

The obvious question is what next? Once Elliott Wave completes its 5-wave, it is supposed to reverse and form A, B, C waves and retest the high of 1 low of wave 4 to form Elliott Wave downwards.

Elliott Wave using ABC Bullish Pattern

Trade Log: Jan. 15, 2010

January 17, 2010 · Posted in ABC Bearish, ABC Bullish, Globex Pivots, Market Structures, SuperBars · Comments Off on Trade Log: Jan. 15, 2010 

On Friday, another ABC Bearish pattern emerged from the overnight Globex high (1147.25) to the Globex Low (1137.5). Both Globex High and Globex Low were also marked as Market Structures (MSH and MSL) patterns. At the market open, ES retraced 66% into the AB to mark ‘C’ (1144) pivot and completed an ABC Bearish Pattern. A Close below 200-SMA and EL (1142.75) produced a Sell signal into AB pattern. Targets were: 1138 at 62%, 1134 at 100% and 1128.25 at 162%.

Around lunch time, ES reached its 162% AB Target: 1127.5..
Another ABC Bullish (BLACK, small range) pattern also reached its near-term target (100% AB): 1131.75

TradeLog_Jan1510

ABCBear_Blog_Jan1510

ABC Bullish
Globex Pivots
Market Structures

Another ABC Bullish on Larger Scale

January 13, 2010 · Posted in ABC Bullish, Fibonacci Bands, Market Structures · 2 Comments 

Jan. 13, 2010 (Market Close)

Another spectacular ABC Bullish pattern with perfect targets at 162AB (1145). This ABC is computed on a little larger size. Today’s Morning sell off produced the 84.62% retracement into AB swing. Market structures (MSH, MSLs) were marking the entire ABC Pattern. The was not triggered until the price closed above MidBand (1133) at 0.38 AB Size. The first target was at 1139 (100% AB) and the next targets were 127AB (1141.75) and 162AB (1145).

ABCBullish_MSHMSL

ABC Bullish
Fib. Bands
Market Structures

Trade Log: Inv. H&S and ABC Bullish Patterns

January 10, 2010 · Posted in ABC Bullish, Fibonacci Bands, Market Structures · 4 Comments 

Inverse Head and Shoulder is one of the greatest pattern to trade. On Jan. 8th morning, ES opened lower after trading Globex range of 1131-1139.5. In the first 15 minutes, Inv. H&S pattern was clearly visible as I marked the Neckline at 1136 level. Also, ABC Bullish pattern was forming from the Globex Low (also MSL). Around 9.50am, ABC Bullish pattern crossed its Entry 1134 level. Confirmed by kTrend, I took the first trade at 1134 with anticipation of Inv. H&S Breakout.

Inv. H&S range from the neckline to the Head (low) was about 5 points. Hence, the target from the Neckline (1136) will be around 1141 area.

The first band of Fib. Zone Pivots on ES was marked between 1139 to 1141. This is another set of targets coinciding with Inv. H&S and ABC Targets.

From 10am to almost 2.30p, ES traded in a rectangle channel (narrow range – 1135 to 1138) and finally traded above the Previous High of 1138.75. By 4pm close, ES traded in the Fib. Zone Pivots band (1139-1141) to close at 1141.5.

INVHS_Jan08107

INVHS_Jan08107

FZP_Jan08103

InvHS_Jan08104

ABC Bullish
Fib. Bands

Globex Pivots
Fib. Zone Pivots

kTrend
Market Structures

ABC Pattern with Market Structure Low (MSL)

December 18, 2009 · Posted in ABC Bullish, Double Bottom, Market Structures · Comments Off on ABC Pattern with Market Structure Low (MSL) 

ABC patterns are corrective patterns where trades are only traded in the Trend Direction (in AB Direction).
ABC Pattern formations are more powerful when a Market Structure Low (MSL) or MSH is part of the structure.
These patterns are traded with Market Context using Fib. Bands and MSH/MSLs to find perfect patterns.

Here is the @ES chart in 1220 tick time-frame, where point ‘A’ was MSL. Also, note point ‘A’ is outside the
extreme Fib. Bands. After a retracement of 90% (small Triangle of only 2.5 points), price retraced back into
the Fib. Bands and signaled an AB trade at 1090. The initial targets were very small: 1091-92 (100-127%).
This pattern continue to trade higher and seen major resistance at VAH (Value Area High).

ABC_MSL

ABC Bullish
Fib. Bands
Globex Pivots
PriceProfile
Market Structures

Yearly Pivot Support

November 1, 2009 · Posted in Market Structures, Pivots · Comments Off on Yearly Pivot Support 

ES sold off hard on Friday. ES failed to continue its upside momentum from previous day. About 11am ET, ES started showing the signs of sell-off when price traded below the Globex Low around 1056 level. Repeated lower-lows confirmed further downside momentum.

Many ABC Bearish setups/trades were triggered Friday. Around 2.30pm, I started noticing the Yearly Pivot (1029.50) as the key support level and may be respected. 3.05pm was the first time @ES tested its Yearly Pivot (YPP, 1029.5) and rallied to 1038. Not a big trend reversal, but this YPP levels can be traded for scalp for counter-trend trades. Second time @ES tested Yearly Pivot again around 4pm. Very few times, I have seen @ES traded near Yearly Pivot Levels. Usually yearly Pivot levels are well respected for a quick scalp.

In Trending markets, Market Structures (MSH/MSLs) are great sources for confirming the reversals.

MSH/MSLs pinpoint key reversal points when they are reversing from:
1. Outside the Fib. Bands
2. Bouncing off Key Pivot Levels/Price Profile Levels.

YearlyPivot_Oct3009

Fib. Bands
Floor Trading Pivots
Market Structures