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TFC Commodity Trading Forum

Pivot Point Trading *PIC*



Good morning,

As we predicted in yesterday's PMTJournal, PERSPECTIVE section, Tuesday
was a wicked, zero gain day. The BBs weren't taking any chances ahead
of Wednesday's FOMC.


Enjoy and be well,


E-mini ES H1
Tuesday January 25, 2011

Tuesday opens gap-down, trades almost to the S1, and returns for a Pivot test.

1 = Whoa! Giant spike-through Reversal, confusing white Bull Dragonfly, and a123 off the Pivot.

A = We are pulled in on a large red candle through the Mid. Advance the initial stop above the
Mid/Free Trade.

B = Large red candle. Per PMT stop rules, move the profit-locking stop above the high of the candle.

Next candle retraces >62%, making it a PMT Exit Now! Signal. SCRATCH! +/- 1 point

2 = Nice 2-bar Reversal off the Pivot. No Volume, so we can't enter aggressively even though the
candle is 2-points long. Sigh.

C = Volume leaps to life (pink arrow), and we are pulled in on a gigantic red candle through the S1.
Advancing the initial stop above S1 locks in instant profits - for a change!

D = Large, red, inverted (Bull) Dragonfly doesn't afford us any stop locking advantage, but it IS a
2-candle 123, suggesting that we add contracts.

E = Large red candle. Move the stop above the high of the candle. Noting that we now have 2
elongated bottom-wicked candles in a row, implying Momentum exhaustion, make that a mental stop for
quick exit flexibility (no Cancel-Replace needed).

The next candle puts our position in jeopardy of PMT Maximum Profit Giveback (MPG) violation. Since
we already have a mental stop, discretion suggests to hang on and wait.

F = Late-in-the-Move DVS (pink arrow) spikes the tail of the next candle and retracts. With only
0.50 point more to retract for an Exit Now! situation, jump the mental stop above the high of the
candle and GET PREPARED.

We bail early in the next white candle. +/- 4.0 points

Lunchtime drift looks like a roller coaster, but we sit tight.

3 = A series of lower highs (green line) gives way to a wide 123 assault on the S1. We are pulled in
on the 2-candle 123 breakout (blue arrow), entering with multiple contracts.

G = Large red candle. Per our rules, move the profit-locking stop above the high of the candle.

H = Even though Volume is steadily increasing, the small gap and large red Spinning Top candle suggest
that the move is coming to an end. Play safe. Use my convention and slip the stop in the gap.

J = Large red candle through the Low. Per PMT stop rules, move the profit-locking stop above the Low.

K = DVS (pink arrow) generates a Lower-Low-Turns-White PMT Exit Now Signal. We exit on the first
signs of white. +/- 3.25 points

4 = Last minute on the PMT entry clock we are pulled in aggressively on a 123 through the S1. Initial
stop safely under the PL.

L = Alternately, we might be pulled in on this candle, with a slightly tighter, unprotected, stop.

N = Late-in-the-Move DVS (pink arrow) drives a large white Spinning Top candle through the Mid and
retracts. Per our stop rules, move the profit-locking stop under the low of the candle.

When Volume drops off completely on the next candle (small, white, Spinning Top), we know Price Action
has stalled, and that the move is failing. Personally, I'd like to move the stop under the Mid, or at
least convert to a mental stop. Either way, the next candle has us out with a couple of points of
profit, and our day ends.

EOD Hiccup (plum lines) is on time with a classic "V" checkmark pattern. The day closes just short
of closing the opening gap.

(Daily, bottom chart)

Albeit taping a red candle, pretty much as we expected, Price Action
hovered Tuesday in anticipation of the FOMC looming for Wednesday.


REMEMBER: Trade the Tape, Not my Prognostics!

=] ;-)>

Tuesday's PMT Chart: