Weekly
The weekly chart is not the chart I trade, but it always important in terms of finding the right context. The charts shows me a number of things which make think that a relief rally is due.
The first indication is the flatness of the and the distance between and price. Second is the overextension signal printed on the previous candle and the reversal signal (the green bar) on this candle. This weeks candle has not closed yet, so that reversal signal is not confirmed, but as long as it closes above 4096 we should be good. Third is the shape of the candle, which is not exactly there yet. There’s still a few hours to go, and ideally I would like to see the candle close at the highs. The least I’m looking for is for the top wick to be shorter than the bottom wick.
What I don’t like about this bounce is that it apparently is happening in the middle of nowhere (according to my TA). I would have expected price to move down at least to the 200MA at around 3200 and probably down to 3000. And I do see still see that as something that will happen, perhaps not in the coming weeks though.
Daily
On the I can see the first signs of a relief rally forming. I made a wrong trade this week based on the green reversal bar and subsequent candle. It’s actually a nice trade to illustrate what went wrong, but most importantly why I went wrong. I’ll write an article on that in the coming week, and I’ll also discuss where the trade was that I should have taken.
Although I made a mistake when timing and executing that trade, the still tells me that the direction of the trade is valid. is flat and theres a good distance between and price. We had a reversal bar and a reversal candle, and we broke the IBR from the reversal bar. Price made it into the trend cloud and is hanging in there. I can see it going up further from here, as long as we don’t close beneath the bar that printed the re-entry signal.
The absolute safe thing to do here is not trade. If you’re trading this system, you should have either exited the short at the overextension signal follow by the hammers, or moved the stop to 4420. Then you can wait for price to reach the and look for a re-entry signal into a short there (or if it breaks through we may get a long opportunity). The re-entry signal that printed two days ago can be ignored since it is at the bottom of the trend cloud. Safest re-entry signals are at or at least near to the .
More adventurous traders can still take a swing at a long, although in my opinion the safest countertrend long has already passed (I’ll talk about that when I evaluate the boo-boo I made). I am taking a jab at a long, but recognising that I may be a bit late, and adjusting the risk (position size) accordingly. Sometimes you must indulge yourself and allow yourself to take a more risky trade. You need to offset that risk though in your position sizing..
You can find a link to the long setup on the 4HR chart below
4HR
Weekly forecast
The weekly and both tell me that we’ll most probably see either some ranging of some relief up to around 5000. If that happens I’ll get in long for a bit according to the 4HR setup and look for signs of weakness to exit around the at 5000. I am bit bit late to this trade, but have to allow myself some fun, so I’ll adjust my position size accordingly and allow myself only to take a minute risk.
If I get a clean re-entry signal short I’ll enter short there too, but that all depends on if, when, and how we get there. And what price does if it gets there.
If we don’t get any relief, and price starts breaking down, I’ll wait for a new setup to form. I can gladly miss the drop from 4000 to 3000. Trading is not about being in every single move an asset makes, it about trying to weasel yourself into the safe ones. I made a good profit on the last short, if I miss this one there;s no harm done.
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Stay calm, and happy trading!
More information on the indicator can be found below:
Published at Sun, 02 Dec 2018 19:20:42 +0000
