Well, we did indeed continue to drift higher into the week’s close and I could have gained some 150 pips more. But that is irrelevant in (my) trading. Whereas we can easily and quite accurately identify entry setups, it is far more difficult to predict with any accuracy, when and where the market will top out/pause/reverse. In my opinion exiting is the most challenging and most critical and decisive aspect of a trading plan (after risk/money management).
That is why I think it is important not just to aim at always getting as much of a move as possible, rather one should identify what is the most probable/likely extension based on whatever criteria one uses, whether that is indicators, price action analysis, volatility, momentum, etc. This is also a probability issue. In this case, based on the slowness of price movement and earlier swings, one could conclude that 50 pips to earlier highs was a 90% certainty, whilst further extension beyond that was maybe only 30% certainty, based on earlier action and in a slow market at the close on a Friday.
Weekly summary:
The week ended up as a consolidation period for the SP500. Which is somewhat surprising considering the seriously major disruptions going on right across the US economy and the huge number of Corona deaths - and with a presidential election only some 6 months away.
Looking at the 4-hour chart, we stayed completely within the previous week¨s range, nearing, but not quite reaching, both the top and bottom at the arrowed points. We have basically just pivoted around last week’s mid-range level (red dashed line). But that does not mean that there was any lack of tading opportunities - afterall the range was around 1000 pips, giving good opportunities in both directions.
The consolidatory nature of the price movement throughout the week is shown by the continued compression of the fast lane MAs within the slow lane band. It is also interesting (at least to me! ) that we are sandwiched between the weekly 200SMA underneath and the daily 200SMA above. That situation is also typical in a broadly consolidating market.
In the big picture, I still favour the upside overall and the daily chart is still neutral/ moderately optimistic. But that is not necessarily going to happen without more of this daily swinging. So I will be continuing with the short term day trades for now.
The far east has continued the upbeat close on Friday in the US, albeit fairly insignificantly - and with some retracing from near last week’s highs.
It is too early to make any decisions yet but all three triple charts are in positive territory and price is currently in the upper half of last week’s range - and even the daily chart is looking more positive.
So will be looking out for an entry point later in the day provided we stay above last week’s mid-point line …
We continued to maintain a positive outlook throughout the day but with very little decisive movement in either direction to offer a high-grade entry point.
So I just took a random entry off the 15min chart simply to be in it since the 4-hour and 1-hour charts were both also positive.
But things didn¨t work out as well as planned. My stop was too close ( actually thought about that but did nothing) and I got stopped on a down spike for -150 pips. However, it started to rise yet again so there was no choice but to jump in with another long and target the high of last week. And we waited, and we waited, and we…
But patience is a big virtue in trading and we slowly ground our way up and eventually hit target at the prev week’s high for +200pips.
So a mediocre day because of that stopped trade, but nevertheless the direction was correct and another plus day in total - and that is what counts.
I have ceased talking any fundamentals here because I want this to be just a TA-based method in order to justify my claim that one can trade blind off technical analysis.
The basis of my claim is the standard argument that any fundamental or sentimental factors, and even manipulation, which are relevant to price, are cumulatively visible in the price movement itself and therefore by analysing price one is actually analysing the combined impact of all those relevant factors without needing to be aware of them. And, in fact, we can never hope to be aware of them anyway, neither all the factors nor how the mass of participants are reacting to them.
PS. After some chats with a colleague I am also applying this method to Bitcoin in the form of cfd’s in BTCUSD. Again, crypto’s are well-suited to pure TA trading so its suits my style well. I took my very first crypto trade ever this morning. It was a buy - and it has sat slightly in the red all day! But since it is a whole one microlot it is currently at a “terrifying” -35 cents! Its fun money, but better than setting up a demo for this. The charts still look long so I will let it be. I don’t know if I am going to include these here along with SP500 in the future. I don’t see much point in that right now.
I thought about this too - how even if there was no order to shut down, businesses would eventually end up doing it anyway because of lack of customers.
I think when you’re so used to how life was in the before times, it can be easy to forget that life is now different. That or maybe they just don’t care also??
That right there is probably the most dangerous part. Wouldn’t this just mean that vaccines may not even work as the virus continues to mutate anyway?
Yes, it seems ignoring social distancing comes in many forms, here are some from our national papers:
They forget (e.g. while packing goods after purchase in the super market)
Putting things in their mouths to free hands to do something else
Youngsters who don’t believe they are at risk and deliberately gather in large groups
Demonstrations in places like the US against lockdown enforcement
Elderly folk who haven’t even heard about any virus
Mischievous youngsters deliberately surrounding older people and coughing at them
Sweden, which has taken a different approach with mainly only recommendations rather than enforcement, hoping that herd immunity will get them through this quicker and with an economy intact. There are still queues to enter restaurants and bars.
My own underlying fear (amongst others) is that the coronavirus will mutate back to where it apparently came from and spread through wild animals and other creatures. We often fail to realise just how much our globe is dependent on its nature such as wild animals and insects. These are already being seriously eroded due to environmental problems and a mutation of a virus would be impossible to control or even vaccine against in the wilds.
One thing maybe people do not consider is that if they happen to be one of those that suffers badly and may have to be put on a ventilator, they are likely to have to put into a coma for a period of even 1-3 weeks. How does one feel knowing that one is going to be put into a coma knowing that one is entirely in the hands of medical staff who are fighting a disease for which there is no cure and from which one may never wake up from! They can only keep you alive as long as your own body’s immune system is fighting against it. That is such an awful scenario!
SP500 has done little overnight. It failed to close over the high from last week on the hourly and slipped back a little.
We are forming a typical compression on the 1H and 15 min charts which, since the 4H is still positive, will often signal a return to the underlying move. However, there is no strong underlying move here, I am only seeing a gradual drift upwards. So this may more likely be a gentle walk along the beach following the waves breaking rather than a new directional start - but I am watching…
My dear little Bitcoin is still where it was yesterday. It looks like it did manage to reach green pips at one point overnight so that is some consolation. Overall chart is still very mildly bullish/neutral so I will stick with it for now but I am not very hopeful that it will end well…
So the market did move up as anticipated and broke that last week’s high resistance line and seems to be holding there. But I took my profit here at 112 +pips because this was a London session move and when it is so quiet there is a good chance that NY will take it lower at some point offering an opportunity for an afternoon trade as well.
But I am happy with this breakout from a compression on the hourly chart - it is a reliable signal with a high probability of continuation.
I could add that the Daily 200-period SMA is visible above here on the 4H chart on the left. That is another target area at just over 3000 - which itself is both a massive psycho-resistance level and a magnet - and not that far away. We are already above the weekly 200 SMA:
Sometimes I suspect the markets are actually watching me and making fun! Just as soon as I close my position it jumps another chunk up in the air - just as if it had been waiting for me to jump out!
Having jumped off the SP bus embarrassingly much too soon, I am taking a closer look at my maiden Crypto trade in the meantime. Yes, my very first venture down this road.
I am not looking at TFs less than 4H/1H charts with this instrument and I am keeping a close watch on the daily too.
This chart is the 4H and 1H. The price seems stuck on last week’s high in the same way as the SP500 was - that I find interesting in a different market. It reinforces the value in watching this particular level.
However, because this move actually started well before I decided to start looking at this instrument I am at a fairly vulnerable level having gone long right here.
The move actually started around the 7000 level ringed (red) on both charts. But I am now looking at that rectangle on the 1H right hand side for my stop zone. This was a consolidation period after that big up move after the move had started. And the rectangle contains a number of bars with longish tails underneath, suggesting another push on the upside, which did happen. So my stop is below that region. If price gets down there then it invalidates my reasoning for being long and I need to be out of the trade. If I had entered this trade at the original start of the move then this stop level would be at a +300 pip locked-in profit.
So I am still long and roughly at par at present. My target is set at about 375 pips which coincides with a period of earlier consolidation on the way down. It is a bit vague.
I should repeat that this is a live but miniature position and the profit/loss is in the fun money league at less than 10 bucks either way! I don’t use demos (the last time I did that to test something I forgot about the position completely. It think it was around the time of Donald Trump’s election as president. Anyway, when I eventually remembered and checked it was a huge embarrassment to me how much profit it had made without my efforts at all!!! )
At this stage I am just getting a feel for the market and a minimum size position is all that is necessary for that.
I did read from somewhere that a leader of one of these anti lockdown protests ended up with the virus. Haven’t looked further into it though.
I have friends whose aunts/uncles have died from this. Some in NYC, others in Asia. One is currently in the ICU still. Been there for 4 weeks now, got the virus from a cruise trip they took.
Sadly, for some people, the virus is only as real as the people they know who have it.
I have moved my stop now to B/E+ and the TL is at 8000. I will now leave it to do its own thing in its own time. Its always so nice when one can do that! If only it would happen more often!!
SP500 is a bit erratic at present and I have no clear signal (except to say that I still favour the upside overall) so, being close to month-end, I won’t be making any comment on this until May. I am also getting tired of watching 15 min charts and it is a bit pointless talking about them because they are old almost as soon as they are posted!
So I have been planning on changing my own input here and will be focusing on Daily charts only across a number of instruments. This probably means fewer comments - but hopefully more chance to post entries and longer term surveillance. This I will also start from next month.
Just hit target with the BTCUSD at 8000 for 250+ pips.
It followed the bands nicely on both the 4H and 1H and reach a psycho-resistance.
That was my 1st crypto trade, but will now look to see if and when a similar set-up occurs. But I guess there is not much point in posting these things here when I’m on a different wavelength…
Brokers regulated by ESMA have to state on their sites how many of their retail traders are losing money.
From a sampling across a number of broker pages, it seems that over the last few Corona months the percentage of losing accounts has risen from just under 70% to around 73%.
This could be due, for example, to:
increased erratic movements in markets
more people sucked into (over)trading on shorter timeframes from home during lockdown
more inexperienced newcomers hoping to replace lost jobs/income due to the pandemic
Interesting stats from GAIN. User accounts up 25% for Q1 if I read that correctly. It’s absolutely believable that a surge of new users is driving that number up.
) that we are sandwiched between the weekly 200SMA underneath and the daily 200SMA above. That situation is also typical in a broadly consolidating market.
Its fun money, but better than setting up a demo for this. The charts still look long so I will let it be. I don’t know if I am going to include these here along with SP500 in the future. I don’t see much point in that right now.
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