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 January 7, 2004
Commentary-
Today was an excellent day for intraday
trading. I saw opportunities in the ES, NQ and the ZB. Since I cover the ES
almost daily, today I'll show the plays in the NQ and the ZB. I'll start with
the NQ.
Given the bullish trend, I was looking for an opportunity to get
long. Sure, at some point one of these setups is going to fail, but that's fine
with me. I'll just keep taking the long trades that set up until I am finally
wrong. Those are great odds, in my opinion. The technique that I will use here
is right out of Kane Trading on:
Advanced Fibonacci Trading Concepts.
I'll start with the 13-minute NQ
chart.
The NQ continued to pull back after today's
open, and I put a grouping on the chart.
The NQ fell into two very tight, very close
groupings. The chart looks like there are only four numbers, altogether,
because some overlap so closely. In fact, though, there are more than four
numbers. With the two groupings so close together I view them, from a practical
standpoint, as one grouping in this case.
I now sit back and see if the NQ
hits the potential trade area here, and if I get an entry trigger. Let's look
at what happened.
The grouping(s) did point to a
great potential trade area, and the NQ really took off. Now, was there a
pattern there, like a 5-point pattern or even a distinctive ABCD pattern?
Nope.
That's why I wrote AFTC, to show how I trade using
Fibonaccis even if there isn't a pattern. Patterns are great, but they are only
a part of my 'Trading Plan'. I find an incredible number of opportunities based
on Fibonaccis and my unique groupings techniques, while I wait for patterns to
setup.
My plan for tomorrow's column is to show how I managed this trade,
step-by-step. I'll do this on the 3-minute chart.
Let's take a look at an opportunity
that I found on the electronically traded bond, the ZB. The setup concept was
nearly identical to the method used for the NQ trade. Let's start with a
5-minute chart, showing how the ZB looked as it started to pull back. I'll put
the grouping on the chart at the same time.
The ZB formed a very tight grouping. I was watching this
area very closely. I was playing for the resumption of this uptrend. If this
grouping didn't hold, though, I was going to be looking for an opportunity to
play the failed grouping. Let's see how this played out.
It's a little difficult to see on the chart, but the ZB
just penetrated the very top of the grouping, and that was it. The bond then
went on to move well over a full point off the grouping.
There were
several very nice triggers on the lower timeframe to indicate to me that the
odds were good that the reversal had come, even though the penetration of the
grouping was not very 'deep'. As long as the top of the grouping is penetrated,
I set up my entry trigger. When the ZB is getting action, I find it very
tradable intraday, and today was a great example of that.
My usual
focus in this column has been on entry techniques, coming from patterns and
groupings. I will try to spend a little bit more time on management from time
to time, and more follow up, starting with tomorrow's commentary.
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