With a bit of day trading range, we got a decent bite (and a
small nibble) out of Tuesday morning, and another very nice
bite out of the afternoon run down.
Rather expecting Wednesday to be vaguely Bearish, retesting
the recently exited LT SW Channel Ceiling (Daily, bottom
right chart, blue channel line).
Enjoy and be well,
DAILY PIVOT MAGIC TRADING JOURNAL - EXCERPT
Pivot Magic Trading
"Any time you don't know what
is happening, get out!"
E-mini ES U2
Tuesday 10 July 2012
1 = Our trading session opens gap-up, taping a lovely 2-bar Anomaly (Overnight, bottom left
chart) off the R2.
A = Opening Range Volume is rather low, but the pull of the Close joins to let us be pulled
in on a frightening white Bull Dragonfly Doji, or one candle later, by a large red candle.
The red candle slams to a halt at the R1.
B = Large red Bear Dragonfly completes a 2-candle 123 through the R1. Add contracts and
move the profit-locking stop above the R1, per our PMT stop rules.
C = The gap is closed. A very large, red, DVS-driven (pink arrow), candle slams to a halt at
the Close. Our position is in Pivot Magic Trading Maximum Profit Giveback (MPG) violation.
Mental stop at Giveback Level.
D = Large red Bear Dragonfly breaks free from a 2-candle 123 above, and completes a 2-candle
123 below the Close (no adding contracts with the always considered proven Pivot a point or
so away), and slams to a halt at the Pivot. Normal stop placement above the Close leaves the
position in MPG violation. Mental stop at Giveback Level.
NOTE: The Pivot and Close are the most weighty of our PLs. We are keenly aware of the high
likelihood of hard Pivot Support. Coupled with the natural inclination for a Close retest,
Readers of the Tape prepare to execute a Pivot Scalp exit on signs of white. +/- 5.50 points
2 = Price Action retests the Close Support-turned-Resistance, fails, and heads to make it a
123 attempt on the Pivot.
The Pivot breakthrough stalls for a 123 underside test.
E = We are pulled in on what turns into a disappointing, large, red, inverted (Bull) Dragonfly.
F = Large red Marubozo rams the S1. Move the stop to Free Trade and a couple of tiks. As you
know, we always need to worry that the troops will rally into the hole punched by one of these
sumo candles. Maybe use a mental stop?
DVS (pink arrow) cannot drive a candle through the S1 Support. The tiny red candle (blue arrow)
itself should be enough to force us to exit. If not, the spike-through-and-retract Doji Black
Volume Bar of Death (or at least when the following candle shows white) cause us to exit!!!
+/- 2 points
3 = No Price Window to the Pivot, so we are not interested in this Doji Sandwich.
Lunchtime drift is calm and sideways in the Pivot-S1 channel.
4 = Price Action suddenly dives to test the S1.
5 = At 1:30 Action Time, Volume is up, and we enter a 123 through the S1.
G = Large red candle eases slightly through the Low. Per our stop rules, move the
profit-locking stop above the high of the candle, or Free Trade and a tik or two.
H = Second healthy candle closes below the Low. Per our stop rules, move the profit-locking
stop above the Low.
J = The situation now sets up a classic demonstration of Advanced PMT New Pull-Back Lock-In
S-Trap Evasion Maneuver (to be included in next version of PMT course).
Volume is way down, suggesting a Stall. The next candle begins to show white, threatening
our stop. The highly reliable MA Resistance is descending sharply at about 45 degrees,
cutting off the top end of an S-trap.
NOTE: We now have identified a probable S-stall. [This step is imperative!]
If we are right, our current stop (above = H) is fatally close to the
flagging Price Action. Exit Now! or adjust?
Readers of the Tape notice that due to the steepness of the plunge, Price
Action has drawn well away from the MA. The MA Resistance is a likely barrier,
halting an S1 retest. Relying on this, we decide to PULL-BACK AND LOCK-IN.
First, we move our stop out of the way of stray trades, say back at Free Trade and 2 tiks.
Then, we alertly and continually move the stop down at the close of each succeeding lower high,
steadily reducing our At Risk, and locking-in additional profits.
K = We have weathered an obvious S-trap.
The trusty MA Resistance continues to limit Price Action, as the Bears begin to regain sente.
Failed test of MA (below the Low, BTW). Per PMT stop rules, we move our profit-locking stop
above the MA.
L = DVS (pink arrow) pumps a giant red candle through the S2. Price Action is within reach of
the Primary Objective, S3, and a regular stop winds up at MPG Giveback Level. Use this as a
suggestion to use a mental stop and prepare for Pivot Scalp exit.
N = Small red candle puts our position in MPG violation. Might even call it a hit on S3.
With little to gain (assuming Support at the S3), we obey the MPG rules and exit.
+/- 7 points
S3 Support turns out to be rock hard. Price Action stalls for a full hour.
P = Interesting. See how the BBs try to rock free, first up, then down through the S3, then
a bigger swing north to get some running room. The PMT entry clock runs out, and the few
Bears trading successfully press charge south through the S3, completing a sine wave as they
dip into unchartered territory.
The incursion isn't very deep, cut short a EOD Hiccup time by a classic "V" check mark
pattern (plum lines). Price Action closes EOD atop the S3.
(Daily, bottom right chart)
Tuesday's large red candle was well south of the powerful
Historic S/R (bright green line), stretching almost to
test the Ceiling of the recently exited LT SW Channel
(blue channel lines). Enough time has passed that we
might view that level (blue line) as Historical S/R, so
one assumes a bit of Support there nonetheless.
REMEMBER: Trade the Tape, Not my Prognostics!
BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!
Tuesday's PMT Chart: