Day trading the DOW 05/05/03

ChartMan

Legendary member
5,580 46
Nothing overly interesting today..... unfortunately. Triple top attempt at 8600 that failed to hold, despite the Bull triangle that developed.Clearly not ready just yet for the big push. Point to note. The last two lows before the drop failed to make support. I would normally take this as a sign of strength and inpending break to the upside. Ignore the H&S here, it only accounted for a 10 point move. Too small to be significant.
Other thing here is the pullback to resistance immediately after support is broken. This is a common feature of breaks either way.The weird "pullback" in the middle of the drop gave a target of 8510- not met on the first try, bu t almost met on the second try- close enough- BUT no follow through. This gave us a PD bottom over 25 minutes- the minimum to call a reversal and off it went.
No clues for an exit on this, you would have had to rely on the up channel break to get out around 8560.
And so another drop with a rise into the close. From the cahrt , we can see that 8550 has now become a support/res. line. So for tomorrow, we can look for 8510 and 8550 as a trading range.
 

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china white

Established member
979 12
cm:

many thanks again! just a question: I shorted 8600 basing on ND extending from the previous session on RSI (well, not only that, but also as I always do, looking at the inability of FTSE to jump - but this is beyond the point). My logic was that since monday open was close to friday's close, extending friday's ND was legit. Would u approve of that?
 

ChartMan

Legendary member
5,580 46
Yes, CW. If the previous day's close is close to the next open, it's fair game to rollover the TA. Otherwise there is a big unpredictable hole.
 

mags_g

Member
81 3
I take it that 8810 and 8850 trading range you are referring too for tomorrow is a 'typo'. Not picking holes Chartman. I know you want close to 8700 for Fridays finish in the Dow guessing game.
 

ChartMan

Legendary member
5,580 46
Nah, show me where it says 8810/8850 :cheesy: hehe
I don't do typo's. Just edits.
 

ChartMan

Legendary member
5,580 46
From yesterday, I said note the trading range 8510 to 8550 ( thanks, Mags) Today was a good example why you should take note of the recent past. The open tried to dip a little but came nowhere near 8510. Then a quick test of 8550 and a decision resolved to the upside. Now we can look for 8550 for support. The decending triangle tested that and then broke to the upside. You could have taken advantage of that knowledge and gone long on the bounce off 8550. Or you could have waited another 15 points.....for confirmation and a safe entry. T1 the target and follow the 100MA up. ND set in from 17:00 to 18:00- with a sting- the extra peak in RSI. When this happens, you would expect the rise to continues on as it has done in the past. A pullback or fall, then off again, but not this time. This firms up the rule of closing on the third peak. IF it continues on up, you can get back in. The odds are firmly stacked against this, but it does happen sometimes. When it does, it's not a big move, and is usually in the later session. You can go short as the uptrend support line is broken....
Now. How to deal with the news spike. Stay out! You know it's coming, don't gamble.HOWEVER, if you must, OR you get caught the wrong way, don't panick. These spikes almost always revert back to "par" very quickly. In this case, it was only 30 odd points so not too bad. More than that and you may be approaching your pain threshold, in which case you will have no option but to close for a loss. Iv'e seen them do a 100 drop and a 100 rise.... The best bet is to stay out and try and call the bottom.
Take the preceding drop off the ND top. The RSI /Price drop indicated a weak fall. Price fell 15 for a drop of 40 in RSI. Market weakness. You could use this to hold a wrong position at this time knowing the prior weakness would not be likely to result in a huge drop....... If you're looking to pick the bottom, wait for the first big up tick to complete.
This spike produced an inverse H&S and T2 target. No follow through here so another short entry. Note CCI approaching 300 at the peak. Follow the short down, calculating targets as you go- T3 and T4. Clearly the mini bear flag below T4 failed to make target...but did break 8550 support, briefly. Mini PD at the bottom here over 8- 9 mins. Maybe a cover here.... or wait to see if we get a bounce off 8550 to confirm loss of support there ...... Hard choice and could be played either way . You should have been on the right side of 80 odd points here, making the choice less critical. That bottom produced another inv. H&S with a target of T5. Followed by an expanding triangle with 8582 target. Around 150 - 200 points available today.
I make support around 8580 now.... ready for testing tomorrow, adn then back to 8550. 8630 for the upside .
 

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bansir

Well-known member
494 42
Phew!
That news spike was something wasn't it!
It's like someone turned the gain up on the whole system.
I was nearly dosing off when that first big black bar appeared.
Happily, more by luck than judgement, I was out of the market at the time.

You said that we all knew the news spike was comming??
I guess it's a good idea to have a news feed runnng along side the chart then? Or should I be checking my diary ahead for significant announcement dates etc?

All the best,
Neil
 

Skimbleshanks

1
2,325 16
Bansir - with respect, that news spike was nothing! FOMC meetings are where interest rate changes are announced, and yesterday's decision in the US was to leave the rates unchanged - so nothing!

Just you wait until they do change the interest rates - now that really IS a spike! Hehehe. From memory (rusty sometimes) I believe that in the past Nasdaq spiked 30 points in 5 minutes - something staggering like that anyhow.
 

JonnyT

Senior member
2,560 22
The FTSE moved down 200 and up 200+ recently in minutes.

Yesterday didn't really constitute a spike IMHO.

JonnyT
 

ChartMan

Legendary member
5,580 46
Today defies analysis really. A perfect RS Switch at the open provided a great long entry.... I make the channel a bit wider now at 8549 to 8585.
Tonight is competition night. How many H7S and Inv. H&S can you count? I have never seen so many before ...... Does this mean the whole day was filled by indecision one way then the other? Lost of small moves of 30 - 60 point with nothing to get your teeth into. Very frustrating. I should imagine there a quite a few traders out there with a nice headache.
 

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ChartMan

Legendary member
5,580 46
Here's a closeup of the RS Switch. It's coupled with PD over 35 minutes.
 

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bansir

Well-known member
494 42
Thanks for the coments all. These potential sudden swings or spikes are all part of the risk then I suppose. Even if the one on Tuesday wasn't so huge there was no guarantee it was going to come back towards it's origin.
Thanks for the tip on the news link Bigbusiness.

'I should imagine there are quite a few traders out there with a nice headache'.

Pass me the asprin.
Kept trying to anticipate a downside breakout and got whipsawed pretty badly.

All the best,
Neil
 

fazalv

Active member
123 1
Can anyone point me to the thread where the following is discussed:
RSI/Price ratio, S/R and R/S switches and Negative/positive divergence.
 
 
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