SPY had a Narrow range consolidation.
We basically bounced around between pivot and R1 for the day. After the first hour of the morning I was suspecting a consolidation day and thinking of a z-day scalping setup.
I learned of this technique through a Linda Raschke presentation and it deals with scalping the narrow range moves inherent in a z-day, buying/selling using Bollinger Bands and it's midline as a guide.
I didn't trade this set-up, as it is new to me, but it's worth documenting for my own good. Being that we could have expected a narrow-range consolidation day (after the previous few sessions trending down) and we had an established level of support at $88 that also coincided with our sessions pivot point level it seemed safer to buy $88 rather than short it. We also had these levels coinciding with a lower Bollinger Band, how many more signals do we need? So, we were looking to buy $88 at the lower B.Band and selling at least half at the midline (perhaps holding half in case it has enough strength to continue back to the other B.Band extreme). So, here's what it looks like, I like using the 3-min chart for these scalping setups.Later in the day (last hour to hour and a half) we could suspect there may be a follow-through move in one direction or another. This happened after the last red arrow in the chart above (these highs of the day corresponded with R1 that is not indicated on this chart). After price was rejected at R1 and outside of the B.Band we had further downside that consolidated into a flag that could have given greater comfort in holding a position to wait for more downside, or get back in on the short side if you had already exited at the midline.
Two things about today's session stand out for me; one is the fat body of the Market Profile (fat bodies tend to expand with a relatively strong move).Also, looking at the 60-min chart, price looks to have made a test of the Head & Shoulders neckline that looks an awful lot like there could be more downside ahead.
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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