Levels for Wednesday

Very little action yesterday again so all our levels are still in place, I have added 1198.25 as a resistance. It looks like we may have a divergence on the 1 hour chart if we reach this level soon.

Value area high 1193.75
Value area low 1188.25

Long Trade

I took a long trade earlier, it was a 15 minute PIN bar coming off a false breakout of 1187.75 level.

Tuesday levels

Due to the lack of any real movement todays levels remain the same with the exception of the value areas which are as follows.

Value area high 1194.25
Value area low 1192.25

We have news at 1.30pm UK so lets hope that it moves the market and we dont have to endure another day like yesterday.

Fib retracement

I've now drawn a fib retracement from the low of 1171.25 to the high 1198.25, the 50% fib is on the same level as an old resistance from 8 April at 1184.75 and the 78.6 fib is right on a support level from 6 April. I will be watching these levels for confirmation before taking any trades.

Inside Bars

I have read that a lot of people look for inside bars to take trades. The theory is that it is a sign of exhaustion and that prices are about to turn. The rules for an inside bar are very simple, the high and low must be contained within the previous bar. In other words it has to fit inside the previous bar.

On the attached screenshot you will see that we had an inside bar this morning on the 1 hour chart which worked. Inside bars themselves do not provide a stoploss level, my stoploss on an inside bar would be 1 tick above the swing high/low which may be quite a big SL on occassions.

Gap fill

The gap which I said was about to be filled actually took another couple of hours to fill. Things are very slow today and with little or no news worth talking about it may stay that way. Our value area high is at 1188.50 but that looks miles away at the current pace.

Levels for Monday

We had a gap up this morning which is about to be filled as I write this. If we move higher we have good resistance around the 1200 level. This is based on 3 factors, firstly the round number at 1200 itself, an old resistance on the weekly charts at 1200.75 and the upward trendline that may come into play around those levels. There is support at 1187.75 and 1183.50 from last week and if we continue to move lower I will be watching the fib retracement drawn from 1171.25 low to todays high. The value area high is 1188.50 and the value area low is 1185, these will also act as areas of support and resistance.

Levels for Friday

Most of our levels were broken yesterday, today I am looking at 1187.75 and 1171.25, I also have the value areas high and low at 1185 and 1176. If we move lower I will also be looking at the fib retracement drawn from todays high to yesterdays low. If we retrace from the current high of the day the 61.8 fib retracement will be at 1177.25 which is also a support level although it was broken yesterday.


Additionally the fib extension at 1197.75 is still in place as our our two levels up at 1200 (round number only) and 1201.75

Divergence at 1177.25

We have divergence at 1177.25 level on the 5 minute chart, no PIN as yet so waiting on the sidelines.

Bounce off divergence

I didnt take the trade but there was a reaction from the divergence, it would have been good for about 16 ticks.

Divergence on 15 and 30 minute charts

There is some divergence on both the 15 and 30 minute charts, no clear trades as yet though.

News events

We have unemployment numbers at 1.30pm UK time today, I will avoid trading around the time of this news coming out.

1174.50

It looks like we had a false breakout of 1174.50, however we had no PIN bar on any timeframe although there was some divergence on the 15 and 30 minute charts. I took a very quick and quite risky long from 1174 getting out at 1174.50. Although it worked out I think this was probably a bad trade to take as there were no PINs. Holding onto this trade would most likely have got me stopped out, albeit only by a tick, before it reversed.

Levels Thursday 8 April

We have had a quite big move down since yesterday. We are now getting back into levels of former resistance although we have already broken a couple. I will be looking at the following levels today.

1180
1177.25
1174.50
1170.50
1166.25

Value area high is 1185
Value area low is 1179.50

Market is dead

I'm taking a break as the market is dead, Bernanke is speaking in 10 minutes which is only going to make things worse. Range has been about 2 points for the last hour or so, hopeless for trading in my opinion.

Possible Trades on 5 minute chart

I didnt take either of these trades as I dont like the fact that things are so slow today. However if you followed the rules you could have justified taking at least one of these trades and possibly both. If I hadnt already taken some profit today I might have risked taking the short as it had some, but not much, divergence.

Waiting out for better conditions

Price came up and is now very choppy around our 1183.50 level. I am waiting for it to break away from this level and reach another support or resistance before considering a trade.

Long Trade from 1182

Quiet morning so far but I just took a long trade from 1182, stop was at 1179.75 and I took profit at 1183 for a quick 4 ticks. The trade was based on a 1 hour PIN that came off our support level at 1180 and our trendline. I didnt hold onto it for too long as we are coming up to the cash open.

Two Bar Low Higher Close signals

As with our "two bar higher lower close" signals we also have the same principle for long trades. The Two Bar Low Higher Close (TBLHC) is a two bar combination which has exactly the same low, the second candle however closes above the high of the first one. This is a long signal, stoploss is one tick below the low price.

Two Bar High Lower Close Signals

Another setup that occurs from time to time is a two bar high with a lower close. This is a combination of two bars or candles that have exactly the same high but the second bar closes below the low of the first bar.

Levels for Wed 7 April

You can see todays levels on the attached screenshot, I have also highlighted the most recent PIN bars at stochastic extremes. In addition we have the value areas as follows.

Value area high 1186.75
Value area low 1182.25

I will also keep an eye on price action at the trendlines as these have quite clearly held very well recently. We have crude oil inventories at 3pm and Ben Bernanke is speaking at 6pm. This morning at 10am we have a speech by Treasury Sec Geithner. These events may cause some unexpected moves in the market.

If we were to move higher then I am looking for 1200 and 1200.75 as resistance. Depending on how things go I might also look for a fib extension of our current pullback.

Yesterdays high

Our fib extension level was almost exactly the high of yesterday, in the morning I said that if we broke out the only resistance was the fib level "If we break out above 1183.50 there is no clear resistance, I will however looking at 1186.75, this is the fib extension 161.8% of the move down from 1183.50 to our most recent low of 1178.25. I would need to see some very good confirmation to take this trade. One possibility is a trendline drawn on the highs on the 1 hour chart or preferably a one hour PIN at high stochastics with some divergence around 1186.75. Time will tell."

In the end there was no trade for me because there was no PIN on any timeframe.

Short trade

Following on from the post about current divergence a 15 minute PIN setup occurred a few minutes back, I went short at 1183.75, stoploss was 1184.50. I only took 2 ticks from this trade as I'm still being cautious with FOMC coming up soon, I should have held for 4 but decided not to. First screenshot shows the divergence on the 5 minute, second shows the PIN on the 15 minute. There was also divergence on the 15 minute chart but not very obvious, however if you zoomed out you will see it.

FOMC Minutes

The minutes of the FOMC meeting are being released at 7pm this evening, this will probably cause some choppy trading. Price has now broken above 1183.50 quite aggressively. I am still watching but I'm becoming more cautious, it will need to be a very nice setup to short here.

Current divergence

We currently have divergence on the 1 hour, 30 minute, 15 minute and 5 minute charts. We are right on the 1183.75 level of resistance. If we get a PIN on any timeframe it could be an interesting short.

Levels

I spent some time deciding between the two levels on the attached screenshot this morning. In the end I felt the lower level was stronger, I expected prices to perhaps slow down once it reached the higher level but then continue and get a bounce off the lower level. In the end it touched the higher level and bounced up.

Bullish Outside Bars and Bearish Outside Bars (or candles)

Although I dont really use them it is also worthwhile knowing about Bullish Outside Bars or BUOB and Bearish Outside Bars or BEOB. The reason I dont particularly like to trade them is that they tend to require quite a big stop.

The screenshots show one example of each, they are engulfing bars in that they and both higher and lower than the previous bar, BEOBs have a close lower than the previous low and BUOBs have a close higher than the previous bar high. These are often easier to spot using a bar chart whereas PINS are easier spotted on candle charts, at least to my eyes. Stops would have to be one tick above/below the signal bar which is why I prefer not to trade them.

This morning's trade

I didnt post the entry and exit of my earlier trade. It was a long on a limit order at 1179.75, stoploss one tick below the low of the PIN bar at 1178. Take profit was 4 ticks at 1180.75 which was hit quite quickly. An alternative target would have been the next resistance at 1183.50 but I didnt want to wait for hours on this trade.

Resistance at round number 1200.00

If we were to keep heading up 1200 is a nice round number that could also provide resistance, like the fib level I'd be looking for substantial confirmation though.

Resistance above 1183.50?

If we break out above 1183.50 there is no clear resistance, I will however looking at 1186.75, this is the fib extension 161.8% of the move down from 1183.50 to our most recent low of 1178.25. I would need to see some very good confirmation to take this trade. One possibility is a trendline drawn on the highs on the 1 hour chart or preferably a one hour PIN at high stochastics with some divergence around 1186.75. Time will tell.

Levels for Tuesday 6 April

I am looking at the following levels today.

1183.50
1180
1176.25
1166.50
1161.25

I am disregarding the value areas today due to the lack of trading yesterday, I dont feel they will be meaningful today. At the time of writing this I have just exited a long trade from a one hour PIN, the PIN was a false breakout of 1180 level and came right off a trendline. It is the second last candle on the chart. I took 4 ticks and my daily target has been hit by 9.30am UK time.

Right down to a 5 minute chart

Right down at 5 minutes now and still quite reliable as a turning point indicator

Divergence on different timeframes 15 minute chart

Down to a 15 minute chart now, very few examples last few days but the one example here was a very good trade.

Divergence on different timeframes 30 minute chart

Heres a couple of examples on the 30 minute chart. Again the vertical lines are covering up PIN bars.

Divergence on different timeframes

Just wanted to post a couple of examples of divergence on different timeframes. Its not terribly clear on the screenshots but each of the vertical lines is on a PIN bar. These setups are not necessarily at support or resistance levels. Of course if they were at S&R levels then they would be more reliable.

These divergences should really stand out, if you have to measure them or think too much about them then disregard them and wait for the next one to come along.

Bit of a dodgy day to trade today, big news coming out on US jobs plus its the start of the long weekend. It is likely to be very choppy so I will be staying out. These are the levels that I can see as being important, they will probably still be in place next week

High of the day?

Unless there's a major retracement it looks like our successful trade was actually the high of the day. This was a very strong level and really jumped out at you when you looked at the 4 hour charts. My rules call for me to either get of the trade with 4 ticks or hold to the next support level, which I did in this case, however price has kept moving lower.

1 hour chart PIN

Looks like we will have a PIN on the 1 hour chart. Its not a good one though, not at swing low, will probably be worth a few ticks on the long side, I wont trade it though, too risky.

1 Hour chart showing support and resistance

Attached is my 1 hour chart, look back and see how the horizontal lines are only based on previous S&R that are very obvious. So I look for S&R on the 4 hour and 1 hour charts and then trade it on the 5 minute charts (usually)

Divergence on a 1 minute chart at resistance

Another example of divergence at an important level, in this case a 1 minute chart. If we had been watching we may have held off on our first trade and we would certainly had a lot more faith in the second trade. Not that any of this matters now because we didnt see it and didnt take it into consideration. Still a good example to post though.

Rest of the day

I expect things to get very slow the rest of the day, with profit in the bank I will take a break and look in later. I'm not inclined to trade again today given the long weekend coming up and NFP news tomorrow.

2 recent PIN bars at 1176.50

So the first PIN at this level failed, stopping me out. Almost immediately another PIN formed, I went short again and this time it reached my target of 1174. Overall in profit so far by 4 ticks. Coincidentally my entry was the same as the last trade, stop one tick higher.

5 minute PIN

A 5 minute PIN bar formed at our 1176.50 level, entered at 1176.25, however it eventually failed and stopped me out at 1177.25, as I speak another PIN may be forming

Heading towards 1176.50

Pushed through 1173.75 very quickly on the cash open, waiting to see what happens at 1176.50.

News in 8 minutes

US Unemployment Claims in 8 minutes, hopefully we will see some action after this announcement

Divergence but no trade for me

Some nice divergence around the 1170.50 level leading to a move lower. I did not take this as I am waiting for a clear move to a new level and there was no PIN. Some traders may have taken this trade but for me its a matter of waiting.

You can see that price came up and made a slightly higher high where the red second vertical line is drawn, at the same time the stochastic and the oscillator at the bottom made lower highs, very clear divergence, price has now moved 6 or 7 ticks lower.

No action so far

Very quiet today so far, price has been hanging around the 1170.50 level for hours. I will not make any trades until it moves to the next support or resistance level, even then I will be looking for confirmation from a PIN.

1 April levels

Using different charts this morning, they are not quite as easy to read but they will have to do until I sort out an issue with prorealtime. Levels for today are as follows.

***update, if we break higher then 1176.50 would provide resistance

1173.75
1170.50
1165
1161.50
1146.50

Bear in mind the important news events today, avoid trading price action around these events. http://www.forexfactory.com/

1 Hour Chart Trades

As well as my 5 minute chart trades I also monitor the 1 hour charts, occasionally a trade will come up. These tend to require much larger stops as the stop still needs to go one tick above the high, even so they are very reliable. In the example shown two PINs appear at our 1170.50 level that I mentioned earlier. Both of them provided a chance to take good profits.

Divergence

I mentioned earlier that I also look for divergence, I didn't trade this one as I was away from my computer but it is a good example. Personally I'd also like to see a PIN on the 5 minute chart but this would have been a very good trade.

You can see that price hits our 1170.50 level for a second time, as price is hitting this level both MACD and stochastics are making lower highs giving us very good divergence.

Important resistance

1170.50 level held well, however no PIN bar was present so no trade.

Short trade

Lots of news today so the market was not easy to trade, only one setup so far which was a short at 1535 UK time. False breakout of 1167 level, PIN bar on 5 minute chart, stoploss 1 tick above the high of that bar, target the next area of support at 1165.50 (I set my order one tick above in case we get a bounce). So limit order to enter at 1168, stop 1169, take profit 1165.75

Levels for 31 March 2010

Little bit late to post them but here are todays support and resistance levels.

1173.75
1171
1170.50
1167
1165.50
1163
1160.25
1156.25

I've set up this blog to post some of my analysis and trades. I trade mainly the E Mini S&P futures contract based on price action, mainly PIN bars, along with support and resistance, fib retracements and divergence. I will be posting important support and resistance levels each day including some levels based on market profile.

I will also post trades that I made trading off the 5 minute chart on the ES (e mini S&P)