And there you have it – the type of session both Scott and I predicted over the weekend:
Pretty solid positive Zero signal all day – one dip which was as weak as American draft beer and thus did not manage to take out VWAP. The subs seemed to be happy today, so all was well in the evil lair.
Geronimo did its thing and entered at the very low of the day – that’s the way we like it. Unfortunately the first candle moved so fast that I’m sure most subs missed that 1279.25 entry. For the record – this is not the norm and in most cases there’s plenty of time to take the entry near the alert’s entry price. [...]
While Scott is all about price patterns I’m more of an indicator guy. It’s just the way my brain is wired and instead of counting candles I prefer to sit down and simply write an indicator that actually takes candle patterns into consideration and produces trading signals (and stops) automatically. Yes, I’m lazy – I rather spend a weekend coding but then crack open a cold one and get an automated alert when a pattern I am interested in pops up. The other advantage of doing this is that I can also back test and optimize various settings in NinjaTrader, which often reveals rather surprising results.
Obviously I wouldn’t be the first to try something [...]
Today was a pretty rough session – if you look at the chart it looks pretty clear in hindsight but the tape is changing and thus we need to also alter our outlook on how to use the signal in our trading.
The Zero dropped like a rock right after the open and the spoos right with it. As you can see prices started to pull away from VWAP (i.e. expanding their distance) which is usually a pretty bad sign and points towards a down trending day.
Two hours into the session I pointed out a divergence on the Zero Lite – see the light green support line I drew on the chart. In the past two years a setup like this has resolved over 80% of the time but today we [...]
As you know I have a variety of charts I consult – some prove to be valuable in short term market conditions, others on a more medium/long term basis. Although I am not a huge fan of moving averages I do use a set of Bollinger bands for my daily charts and they have treated me pretty well in the past few years.
If you look at candles or momentum indicators today you will see very little to justify the current drop as well as the fact that we seem to be in the process of painting a low at around 1276. Of course it’s quite possible that we drop further from here and if we do so it would mean pretty bad medicine for the bears. Let me show you [...]