Quite a move there today. There was one head-fake breakout in the early morning before we settled into a range. The break of that range was ultimately quite fierce. Some things to point out; for most of the day we had a strong positive TICK bias while price bounced around in a range (perhaps a signal that "momentum" was unable to move price higher?).
Price basically chopped around within an upward sloping channel ever since yesterday's impulse move to the upside. After consolidating that upward impulse move, our next momentum push up was exhausted (momentum oscillator registered a tiny push up mid-way through the day). Curiously we find ourselves back to that lower channel line.Here's how things played out; The initial "First Cross" entry (green dot in sub-plot) that was triggered was nauseating to sit through (the second green dot was a way of saying hold on a little longer). The first short entry (red dot in sub-plot) was golden, as it triggered an entry at the very beginning of the move down.It's pretty amazing how quickly we've gone from one consolidation zone to another. Check out this 30-min chart where I have levels of consolidation highlighted.Today was a perfect representation of a flag setup. First, we had a low-volatility range (which can be reflected in an ADX below 30, not shown). We had our impulse move (lays the foundation of the flag's "pole"), followed by consolidation (the flag itself), culminating in a continuation move. These continuation moves tend to carry some of the highest probabilities of playing out as we have to remember, everyone is watching and waiting for that flag to break-down, it's a self-fulfilling pattern.
So, the big question is....are we putting in a top, or was today simply a method of shaking out the carpet to see what falls out? Oh yeah, there's that Treasuries dislocation.
Here's a curious look at the SPY 60-min chart with nothing but 3-moving averages plotted, the 20- & 50- EMA's and a 200-Simple MA. Kinda looks like a pennant huh?
The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at email@example.com
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