Top Pick Trading Forum

Hi Eric, in the screenshot attached, the market opens higher and we get a bullish push up. You mention "waiting at the ema" during the first pullback with an expectation of retracing and pushing up some more. The thing is, are we really waiting at the EMA or are we watching that previous swing high from the previous day at about 12:00. It retraces there almost to the tick to that high before rejecting.

Still struggling to apply all these little nuances and precisely weight the EMA's significance. Seems like that to-the-tick retracement combined with the EMA "acting" as support is giving us confluence.

In other words, if we didnt have the information from the previous day, does the EMA "act" supportive enough to consider a trade there?

I'm laughing a little bit because this directly relates to last Friday and very strong trends and how to appropriately manage.

The market is fractal. If you consider the previous day in this 5 minute chart as the open until 10:30 on Friday (10/06/23 5 minute chart), that gap open is exactly the 10:30 huge bull bar on 10/6. Really seriously.

In strong trends, the ema can be used as the 1st line of support until the gap bar. It is an unusual circumstance and is listed within the market cycle application. Strong trends are an unusual circumstance. In a strong trend, the easiest way to play is using the ema. The issue is most individuals trade breakouts incorrectly (because identifying takes more skill), trading the pullbacks is easier, that is the key (and there are a variety of ways). Easiest is buying above bull bars after the pullback. Why, because the sequence moves as spike -> pullback -> channeling -> trading range -> [it depends]. Few know how to trade a spike and blow up because of over leveraging. In this graph, 9:30-10:05 is the spike. That 10:05 gap up on the 5min -> wow that is rare!

After the pullback you want to be on the move to "ride the lightening", and you know where that stop loss is now. Where is it from the gap up? Yeah, miles away. The pullback defines a good stop loss!!!! And for the strongest of trends, you hange on until higher lows no longer apply [or reverse]. Because it will be this way until a trading range. Here about 2pm.

Very important skill, and applies usually to 1-2 days a month. However, we had several down sequences over the last week, and Friday was the opposite. Several low probability things happening almost in series. Account killers until one comes to terms with lower probability happening more often because of market changes [professionals changing gears usually to risk].

On this graphic, the open was the test of the high of yesterday. The pullback was the pause test of bars 4/5 of day (it is a pause and subtle because it doesn't appear as a bear bar). Then prices take off after that test as it didn't pullback and test the previous day's support as the open already did that. . . Bar 1 - "check?", bar 2 -> see ya! The pullback tests bar 2 "see ya" but the 1st level of support to verify is bars 4/5.

Great studying!! PATs strength is trading channels and trading ranges. Remember to review 10/6/23 on the 5 minute chart for similarities.

Hopefully helpful and good trades to you!

eric-pal wrote: ↑Sun Oct 08, 2023 11:37 am On this graphic, the open was the test of the high of yesterday. The pullback was the pause test of bars 4/5 of day (it is a pause and subtle because it doesn't appear as a bear bar). Then prices take off after that test as it didn't pullback and test the previous day's support as the open already did that. . . Bar 1 - "check?", bar 2 -> see ya! The pullback tests bar 2 "see ya" but the 1st level of support to verify is bars 4/5.

So the big bullish bar on the attached graphic was not the test of the previous day high, it was a test of pause/range bars 4 and 5 of the spike up at the open. Correct?

Also, youre saying that the previous day high was already tested by the open, correct? Is this an assumption based on the idea that because the market opened higher and pushed past the previous day high, there must have been a "test" of it during the overnight hours that we dont see? Or is bar #1 the opening bar evidence of the test of yesterdays high being that its a bearish sort of range bar?

Im really trying to get the sequence of events here. To my untrained eye it looks like like the first pullback and big bullish bar is the test.

Ah.

I was looking at the 11:45am of the day before, which was the open test. You are correct, the high of yesterday experiences the same effect on the pullback.

Review this situation again as both cases are seeing the manifestation of bullish bias succeeding. For 11:45 it is bar 3, on the high of yesterday the pullback is the breakout pullback of that. NICE WORK!

Hopefully helpful and good trades to you!