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Why an early fail can actually HELP a breakoutThis is a great example for traders of all timeframes to study. I don't really have time for people basing trades on wide zones - that's fine for analysis, but for a TRADE, you've got to see the fight at a specific level. When you draw these correctly, you can get a really great picture of evolving sentiment and balance of power shifts. Most traders treat breakouts way too lazily. You don't just enter at a new High/Low. You NEED buildup. Any naked attack from distance is likely to fail. But what if it only pauses, instead of crashing? Do you redraw the level? Do you avoid the trade completely? What works for me: Talk out the developing scenario. A fail failed? Ooh, interesting. Maybe there's more power on the original side than expected. Once the breakout's happened, how is the other side thinking? I was biased long, getting everything I wanted to see....but what would the Bears want to see? Probably a close back under the grey/yellow boxes, right? But wait, now that we created another temporary level during the failed probe, there's another level price needs to break through before even attempting the yellow level and then grey boxes! --> this makes for a likely bounce point, and creates several chances for late entries. Best of all, it means a breakout entry at the original level will be protected by that bounce and your trade stays green.
CBOT_MINI:YM1!Education
by structuredtrader
EURUSD moment of truthWe've already seen a shift in power to the Bulls on a shorter term level. Now we're testing the original point of expansion, which is often a natural level for price to retest before resuming trend. However, in this case Bulls are coming at the level with a LOT of power. I wouldn't make any trading decisions until either the red lines are cleared and retested to the long side, or price is significantly rejected at this volatility expansion retest. Again, I'm looking at the 5/15m timeframes, and I need to see something dramatic happen on the H1/D1 first. Great fight to study, though. If you're still holding a short position, I imagine you're sweating :)
E
by structuredtrader
CL breakdown continues powerfully, big Daily levels in sight nowUpdate to a previous post I made about the CL level breakdown. Bias remains short until proven otherwise. Flat, no clear entries for me until tomorrow morning when we look at premarket price action and range. Yesterday's trade posted to twitter. 11.25R despite mismanaging the hell out of it. It's imperative you learn to take wholesale entries, understand context, and know when to pull the trigger and when to HAPPILY stand aside.
NYMEX:CL1!Short
by structuredtrader
level attack without buildup, the recipe for a trapWhen you have your eyes consistently at the same important levels (preferably horizontal ones), you'll quickly see the difference between a buildup that creates a powerful breakout vs a breakout fail / trap. Naked run ups like this can be scary to get in front of, and it's not a straightforward entry, especially if you're executing on the H1. But this is why you should be building libraries of similar setups. If price knifes through that level and shoots straight up, its likely because of some really spectacular news catalyst. But in NORMAL market conditions, this is a great trap patter to study. I think I recently shared a chart showing consistent buildup ahead of a level on the NQ. Several turns, wedging, etc BEFORE the level's probed. That's power, like a coiling snake. But no coiling here. Think about the psych of the traders involved here. The Bulls who bought down low are happy and probably looking for an excuse to cover. Smart longs are covering at least part of their position here (sell orders). Some late FOMO Bulls are looking to get in and will try and buy on a probe past highs. Big money isn't doing this. Bears are entering and keep pushing price back under the level (check out the 15m). With each bar, more Bears are selling. IF price pokes back up above highs, that's usually where Bears will tap out and the BO will be safe. This actually momentarily happens on the 15m, but it ends up turning into a second Bull trap. From the same perspective, once we've got that wedge, a push below the wedge spells the end of the Bulls. When it happens, there's no fail of a fail....Bulls pull out, and price crushes back into the big range.
Education
by structuredtrader
D1 bias, H1 setup, short term executionI'll post my Ninjatrader charts for trade entries. This is the kind of setup I want to wait for vs fighting the grind on NQ today. I'm a momentum trader, and momentum comes from traps and/or tipping points. I don't want price to ever come back to my entry and I don't believe in wide stops. Before taking entries, ask yourself about the market state. Is it grinding? If so, you're going to get killed with constant retests of your entries, general noise etc. What's the point getting into a position you think is going to be retested (I'm speaking as a daytrader, not a swing trader...). If you're getting stuck overtrading, ask yourself this: Do I really expect this trade to move to my target? If there's a preceding trap AND contraction AND empty space ahead of you...that's where the money's made.
NYMEX:CL1!Education
by structuredtrader
EURUSD D1 breakout and subsequent H1 opportunitiesSee chart for relevant explanation. These two levels offer clear markers we can use for context relative to the D1 wedge berak. The eventual break of A looks great in hindsight, but wasn't a great breakout setup. B provided a much stronger story, and exactly the sort of price action we're looking for ahead of a breakout. I'm borrowing directly from Bob Volman --> trading around these levels is highly dependent on the presence of buildup and potential for double pressure. The break at B is one of the few grade A BO setups. We expect the kind of momentum that followed because the Bull-Bear fight that went on for the prior couple of days suddenly has a total paradigm shift. The same level, at which we're experiencing directional contraction (wedging against the level), is where longs are going to be forced to sell and aggressive shorts will be looking to sell to enter (hence, double pressure).
by structuredtrader
Levels introduction, ideal scenarios in EUR/USDSee chart for relevant explanation. These two levels offer clear markers we can use for context relative to the D1 wedge break. The eventual break of A looks great in hindsight, but wasn't a great breakout setup. B provided a much stronger story, and exactly the sort of price action we're looking for ahead of a break. I'm borrowing directly from Bob Volman, but trading around these levels is highly dependent on the presence of buildup and double pressure. The break at B is one of the few cases of a grade A BO setup. We expect the kind of momentum that follows because the Bull-Bear fight that's been going on for a couple of days suddenly has a total paradigm shift. The same level, at which we're experiencing directional contraction, is where longs are going to be forced to sell, and aggressive shorts will be looking to sell en masse.
by mcjackson