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Coming into today the key levels are very similar to Friday.
Support 1621.50-1623.25, defined by: ONL 1621.50, VAL 1622.00, MCLVN 1622.00, Weekly PP 1623.00, Daily S1 1623.25
Midpoint 1626-1627.75, ONH 1627.75, Daily PP 1626.75, VAH 1627.00 and the VPOC from the last few sessions at 1626 (more…)
The founding principles behind futures markets are for
businesses to hedge their positions. Ranging from General Mills buying sugar to
lock in their costs, to General Motors shorting the Yen in order to lock in
their agreed contract prices in Japan.
For a while I studied Larry Williams’ method on swing
trading commodities and it completely resonated with me. Mainly the basis of
his trading is COT analysis and seasonal patterns. Which is an oversimplification,
but nonetheless I finally felt like I was seeing what moved the market and
riding with the whales that moved those markets. The greatest part was, in
order to be wrong the market had to prove the big boys wrong who were betting
billions.
The S&P 500 E-mini, is an extremely liquid and cost
effective hedge/insurance product for the equity markets. I assume this as the
guiding fundamental truth of the market place. Another truth about the market
place is that it spends 80% of the time range bound, which means our goal
should be to devise a strategy to exploit the range. In short, mean reversion.
So the first post in this series was a primer. I don’t know how to imbed links but I am sure you can find it using the find feature on the site. That said this next post is devoted to doing your homework and weeding out levels so you focus only on “value” areas.
Basically a value area is a predetermined place to do business. If the market is not in your area of business there is no trade. Period, no exceptions. If we are testing it from above that value area is then support and buying triggers should be taken. If testing from below short triggers should be taken.
So first off I have a chart to share on important levels based off of the 60 minute. Focus on how its drawn, looking at the WICKS (see first post under candlesticks).
This post is going to serve as a primer for future posts detailing day trading tactics/analysis, homework, finding your set-ups and eventually breaking down given set-ups that occurred throughout the week. I think the natural progression of posts will be best suited for everyone. This will be geared solely toward the ES, though the same tactics apply damn near everywhere.
First lets examine what you need to pay attention to:
Opening range– Often referred to as the OR, IB or opening 30. Basically it’s the first 30 minutes of market action during regular trading hours.
Why is it important?
Read about the initial balance and opening types in Mind over Markets, or the PDF called 10 o’clock bulls.
What to focus on?
The high and low and of course the application of this context (get to that in later posts). The opening 30 gives a heads up as to who is in charge, if we go to the high of the OR and we get a reversal printed, that means a hell of a lot more than a reversal just occurring somewhere. Again if you read those two books it’ll become abundantly clear.
