I have decided that blogging takes up a lot of time, obviously. For this reason I will do my best to update this blog on a weekly basis. Hope you enjoy.
The recent volatility might be driving you crazy, but if you have discipline and a solid trading plan then you are probably enjoying the profits. I can’t stress this enough, discipline and a trading plan are your edge. Everyone goes through their cycle to find the Holy Grail in search for an edge, but the edge relies within you. Once you realize this simple concept and grasp it then you will be well on your way to becoming a successful trader.
First off are the YM and ES. Since both charts look nearly identical I won’t spend a lot of time on the YM and focus more on the ES. On the daily there is a small trend line and strong resistance, forming a nice wedge. There are a few ways to play this, you can wait for a breakout and CLOSE above or below the trend lines. If price closes above resistance then it would be a safe play up to around 1400, and a close below would be a nice short to around 1325. Both scenarios can bring good risk/reward setups if you plan the trade properly.
The ES weekly is rather interesting. Old support around 1300 is holding very well. If you look back several years you’ll see how important this level is. Also the bullish trend that was started in 2004 was broken a few weeks ago and is now acting as resistance. As of now the safe play would be to buy at the support level and short at the resistance. Of course if 1300 is broken I think we will quickly test 1250. If we are truly in a recession and more bad news is to come, then I wouldn’t be surprised for 1250 to be tested in the near future. But of course I won’t trade that direction until my charts tell me to do so.
Crude is also giving us a nice range bound channel to trade. On the daily we have a spinning top at $95 which is a resistance/support area. If you look back a few weeks to $100 you’ll see a similar setup that paid very well. This is where combining the daily and weekly charts can come in handy; looking at the weekly chart I wouldn’t be jumping to short yet, whereas at $100 we also had a spinning top to confirm the daily. If $95 holds, then I would be long to $100. If $95 breaks, I will short to $90. Simple trade, manageable risk/reward.
Now onto gold; gold looks to be setting up a nice triangle formation which in my opinion would be a continuation pattern. The declining volume and tightening price movements are noticeable. If the market continues to fall then gold could sky rocket from here. Sometimes it pays off to learn how to combine various markets to see how they correlate. Sometimes it works, sometimes it doesn’t. Gold could still fall here though, and if it does I would see $880 as a reasonable resting point.
Good luck this week, and good trading.
