This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
This is a trade I made Friday based upon two of Teresa Lo’s discretionary setups found in The Ultimate Trading Course. As you can see from the 5′ chart of the NQ, it was testing the highs of the trading range. I was actually expecting a breakout here, but I was waiting for confirmation. It seemed like it would be a repeat of Thursday’s rally into the close.
I was also watching it on a volume chart (3000). I noticed a Trader Vic 2b pattern setting up. A variation of that pattern can be found here. The variation is more aggressive than the pattern I played. Honestly, I wasn’t confident that it would continue to sell off, so I waited.
On the volume chart, the uptrend line is in black (like you couldn’t figure out which was the uptrend line). The upper limit of the trading range (volume chart) is yellow. The line in the sand is the green line. Once price breaks the uptrend line, you have the 1st step complete. According to the Easy as 1 - 2 - 3 pattern, you don’t need it to make new highs. You just need a test. This one actually ran the stops, so that’s even better (point 2). I waited until it breached the green line (point 3). The market paused briefly forming a narrow range inside bar (the Pause). Its very similar to a dummy play that I was used to doing with stocks. Its a low risk entry in a fast moving market. The entry is circled. It dropped like a rock for the rest of the session. I wish I could tell you that I got a quick 30 points on the drop, but I only scalped for three.
I particularly like the Fast Flag, Pause, and Wunderbar patterns. You can actually wait for the move to get underway, and jump on board. That was the only trade I made. Having the confidence of knowing I could gain an entry in a quick paced environment, gave me the peace of mind to actually let the move confirm itself - in whichever direction it eventually decided to go.
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
