Trade Review Friday 5/27/2016: Identifying trend change

My plan entering the day was to short DUST into resistance if it popped or gapped early on.  This is exactly what happened so I began to scale into a short and built a pretty healthy position.

I was feeling pretty good about my position with the early price action figuring I had the pattern and wind at my back based on the above chart.  Unfortunately it decided to hold and bounced.  I had to cover with a big loss.

From there though, I took a look at the chart and noticed that trend had definitely changed and spotted a low risk entry.  So I decided to flip my position and went long at 16.62.

I am not ashamed that I was short early on and took the loss.  Losses happen, its part of the game.  But I was still mentally in it that I was able to recognize what was going on and take a better trade with the wind at my back.  I was able to recover all my losses and more to finish the day green.

Happy Memorial Day and enjoy your long weekend.

Trade Review: DUST

If you have been following Gold or their ETFs such as DUST or NUGT, you've noticed how crazy their range has been.  I have personally traded DUST just because I can manage the trade a bit better with 1 cent spread.  So, yesterday NUGT bottomed and DUST topped.  There was a nice up trend in NUGT and a nice down trend in DUST.  We will speak of DUST for the remainder of this write-up since that is what I traded.

My plan entering today was if DUST opened green, it could have more room to the downside for a short.  On the other hand I was also prepared if it gapped down, I knew there was support there for a bounce.  Below is the 30 minute chart from yesterday.  I figured if it gapped up towards 16.50 I could take it as a short.  But if it gapped down towards 15 or 15.50 and held, I had a strong bias for a long.

Here is the first hour of action.  within the first 5 minutes, it held the 15$ that I knew had some significance and then re-claimed the 15.50 level and began to build over it.

My original add was 15.49 as a starter position and continued to add as it built the flag we see above.

 
As time went on, it seemed to breakdown on an intraday look, breaking below VWAP.  In my younger days, I probably would have been freaked out by this dip and sold.  BUT, what I had on my side was a bias with important levels to trade around.  As I said earlier 15 and 15.50 was areas of interest on this chart.  This was a little fake out and it didn't do anything wrong technically on the chart.  Was it ideal that it dipped down, No.  But this is the stock market, it wants your money it wants you to make emotional decisions.

So what would be your guess of the chart now after seeing all that you have seen?  Is it going to break down?  Lets find out.

The stock breaks out and runs right into its next resistance point.  When a stock does exactly as you planned it is easy to trade/manage it without emotions coming into play.  Its so important to have your levels of support and resistance known and drawn, because at the end of the day we know stocks move from support to support and resistance to resistance.

Before you enter a trade. make sure you have these 3 things:  A bias, trend, and room to move.

The Path of Least Resistance : Market review 5/16-17 2016

As day traders, so much of our attention is focused on the intraday pattern.  But the bigger time frame is always most important.  The more you zoom out the better.  Stocks move from support to support and resistance to resistance.  In order to get the biggest moves, you need to find stocks that have the most room until its next resistance if you are long or the most room until its next support if you are short.  

Here are a few examples from the past 2 days that I traded that has lead to great gains.

So going into Monday, I had NFLX on watch for a bounce.  Friday it held its previous low.  This gave me an idea to look for an intraday pattern for an entry, knowing that the stock had room until $90.

Above is how I played it and what I noticed to confirm my bias for a trade.  Notice how once the low held, it continued in an uptrend until its next major resistance (my target) of $90.

Before I show my next trade, take a look at the chart below and be truthful to yourself and answer what you think the stock would happen next. 

I would assume most would be thinking lower prices were in the picture.

Lets take a look at the overall picture now.  I had this on watch going into today 5/17/16 based on the fact it had some news and had a great 30 minute chart with room to run if it wanted to.

Above is the 30 minute chart entering today.  I had a bias if it broke 28 it had room to atleast $29

Above is the flag that I traded.  

And this is where it eventually hit a resistance it could not pass.

Next is MGT 

All this was, was a simple flag pattern.  Why was it so effective?  Check out the daily on this thing.  No noteable resistance to be found + a low float = explosive moves.

The most important thing to take from this blog, is this:  You have the best opportunity when you have the path with least resistance.  

Important levels

UWTI has had incredible range lately.  I have traded it back and for a ton.  Take a look at today's intraday chart to see for yourself.  Notice how perfectly it moved between its levels.

Once it broke its opening range, it continued to build under that level.  It was a clear downtrend bias. I waited for a bounce to its new resistance and took a short once it stalled out.  After that it was scaling out near the temporary support.  After it broke the 24.30s area you can see it had a strong down push right down to its support area.  Things move nice and easy when you have defined levels and plenty of room on a chart for the stock to make its move. Thats what this had and that is why it moved so nicely.