|
|
| |
|
 August
11, 2004 Commentary (mid-week edition)-
Today I'm
going to show a few plays in the intraday ES from Tuesday and Wednesday. The
latter play will continue on my recent theme of making subjective judgment
calls on what patterns to trade, and when to filter out a trade. As I
mentioned, this is a skill that takes a lot of time, practice, and experience
to learn. I'm hoping that watching how I do my evaluations will be of
assistance to my readers in learning this process.
Keep in mind
that when I go over setups in this commentary and I throw in my thoughts, I am
only able to cover a small amount of what I may be looking at and thinking. I
also usually only show the most salient parts of my groupings and other lines
on my charts. It's just not possible to cover every single point in a column
like this.
Almost all of what I do is detailed in the books, and
for those that want to get first hand exposure to what I do, with the ability
to ask endless questions, you might consider the mentorship program. In the meantime,
I'll offer up whatever I can in this column. I just want to be clear that you
are only getting the 'highlights'.
After the Fed meeting yesterday the ES
rapidly began to sell off. I put some retracements on the chart, and a median
line with parallels. Something jumped right out at me. Let's look at a
13-minute chart.
The ES had two tight numbers coming together
right at the lower median line. This was also right on top of a large cluster
of 'support' directly to the left on the chart. Let's see how this played out
on the 3-minute chart.
The ES came right off the combined area. I
really keep alert for trades that combine my 'usual' Fibonacci techniques and
median line techniques. Go and look at the 1-minute chart on this and think
about possible entry triggers. What finally made this play such a great play
for me was the absolutely great entry triggers down on the 1-minute timeframe.
I called this play live in the chat room.
Let's move on to a play from today.
There were a lot of numbers dwelling in the 1062-1065 area on the ES. This was
a zone to watch for a possible reversal play back up. The top of the area was
defined by a 1.272 external retracement at 1065. The ES came down to 1065.25,
and then started up strong.
It then pulled back, and the assumption was that it
would roll down lower, well into the zone. But then it did something
interesting, and that told me something. And what it told me was to reconsider
the original potential trade setup. Let's look at a 3-minute chart, and see
what I was looking at as I made this decision.
The ES formed an ABCD pattern, set up to
continue this new possible uptrend. Three key numbers for the pattern fell
right in one spot, and it no longer looked to me like it was going to fall into
the lower area. At this point, I decided I'd rather get stopped out than miss
this potential trade. The odds seemed better to play the smaller, new pattern,
than to wait.
This is where the judgment comes in. Of course, I waited for an
entry trigger, and I felt that was especially important here, where we might be
looking at 'wave 3' of a five wave down sequence. Let's move to the 1-minute
chart, with my grouping and the pattern highlighted.
The ES triggered just great on this one. The
arrow shows the move that convinced me an uptrend had started. Again, this is
where my judgment came in. That move looked like a first thrust in a new trend
direction. It didn't look or act corrective. I just didn't see another move
down. Then a beautiful corrective structure down formed, and I was convinced I
had to look long.
I was evaluating the price action and market behavior in a dynamic
way, and that motivated me to shift from the original potential setup to a new
setup that formed just above. If I had waited for at least a penetration of the
top of the lower area, the trade would have been missed by one tick. The setup
that formed was just too clear for me to wait any longer.
I factor a
lot of experience and screen time into my decisions on what setups to trade.
Don't be discouraged if it is hard for you to make similar decisions. It takes
a lot of work and practice to get this kind of feel. I explain a lot of the
process in Kane Trading on:
Multiple Timeframes and 'Context', and I will have more to say in Kane Trading on: Trade Management
when that is done.
In my opinion, this is the type of stuff that you just
won't see at all those clone sites that just show you patterns, or give you
pattern setups. I try to teach trading, to help people become fully independent
traders. The potential trade area i.e. 'a pattern', is only one small part of a
complete 'Trading Plan'. I try to teach every aspect here at Kane
Trading.
Don't forget, I mentioned a big 100th commentary anniversary
surprise for all the readers of my books, and I'm working hard on it. I can't
say any more just yet, but it should be something when I finish. I'll provide
details when they become available.
The next commentary will be the weekend
edition, posted by Sunday.
|
|
|
| |
|
|
 NOTE: Reading this page or
any page on the Kane Trading website, or utilizing this website and any
material
contained herein in any way, shall constitute an
acknowledgement that you have read, understood and agreed
to
all the disclaimers,
terms & conditions, and
policies of this site.
|
|
|
This
website is best viewed with MSIE 6.0, text size set to medium, and screen
resolution set to 1024 by 768.
Copyright
© 2004 Kane Trading. All rights reserved.
|
|
