Hair-raising is the word for it – trading the US stock indexes I mean and is a day trader’s dream with daily Dow moves of many hundreds of pips. Yes, I sometimes engage in very short-term trading, but my main interest is in trading the major swings that can last anywhere from a week to a few months.
But here is a great example of how I day trade.
Of course, success in both activities requires pin-point trade entries where I rely on my time-tested Tramline Trading methods. And since the Dow all-time high of mid-January, I have been highly successful in locating counter-trend rallies before the market staged another leg down. I have relied heavily on the Fibonacci wave relationships.
And day traders can use my service as well. Here is a great example from Thursday.
In my 9 am Thursday morning Trade Alert received by VIP Traders Club members, I posted this Nasdaq chart
According to my best guess for the Elliott wave patterns, I reckoned we were on the verge of a large wave 3 down for the rest of the day (Thursday). Short trades could be taken there. And this is how it panned out for day traders
On my favourite 2-hr chart, I could draw a lovely tramline pair that should enclose all trading – until the market breaks out of the channel, that is . If my forecast for a decline was correct, I would expect the market to decline to the lower tramline support where I would take profits. And that is precisely what happened within just a few hours.
From an entry at the 6640 level, that would have been a profit of 90 points in 5 1/2 hours. Quite leasurely, really.
And what a beautiful example of how to use my tramlines. And still using my tramline method, I then went long for a low risk entry (setting my stop just below the line). And from meeting this lower tramline, the market came roaring back towards the upper tramline resistance.
And because the entire m ove down appears t be a three (counter-trend) there was a good chance the market could rally right through the upper tramline. So, using my Split Bet Strategy, I took part profit at the upper line and moved my stop on the remainder to break even. And this is how it turned out into the close
The rally was explosive! It powered right through the upper tramline to give me a superb 250 pip gain on the remainder of my position for an overall gain of almost 400 pips. Not bad for a day’s work.
Of course, these setups do not occur every day – far from it. The key here was that the wave progression was pretty clear and the market all along confirmed my roadmap so that my stops were not in any danger.
Also, these opportunities can only be exploited by full-time traders. For traders who have another life, I advise using my swing trading approach.
Crude oil is pips away from my $70 target
I have been long crude oil for some time and I have had a target at the $70 zone from 2016. At yesterday’s close, we are just pips from hitting it. This is the weekly chart that tells all in EW and Fib terms
The savage decline in 2015 is in a textbook five down to the 2016 low around $28. From there, I expected a sharp reversal from the “overshoot” (see last week’s coverage of GBP/USD) and the huge momentum divergence.
To cut a two-year old story short, the market is tracing out the textbook three up following a five down with the market approaching the end of the C wave as the $70 zone has been achieved.
And the C wave is in the required five up – here it is on the daily
I have a lovely five up that appears at or near completion. Incidentally, yesterday’s very bullish surge of over $1 was in the face of recent ‘bearish’ storage reports.
Putting all of this together, I believe odds are strong that any move much over the round-number $70 mark should meet stiff resistance. We could see a large daily key reversal very soon and I shall be watching this market like a hawk.
At slightly lower odds is the possibility it could rally up towards the major trend;ine or even the next Fib level at around $80. But the bull run is on dangerous ground. Here is the latest COT data
showing hedge funds at a mammoth 10-to-1 long. This has to be one of the most crowded trades in history! When this baby turns down, it will do so in a powerful third wave and I do not want to be long!
I shall be looking to take profits very shortly.
The dollar surges
In my post of 17 February, I headed it by the line: The Dollar Has Turned. The euro was trading around the 1.24 area very near its highs and this was the chart I posted.
As I stated, odds were very high the euro has turned. Just admire the huge momentum divergence at the wave 5 of 5 high. This is the current position:
After much too-ing and fro-ing under my wave 5 of 5 high, the market finally collapsed and had now hit the 1.20 target zone for a cool profit of around four cents.
Odds are good for a bounce off the Fib 62% support where there is also an “overshoot” but the main trend has now turned and that is the way I shall be trading it.
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