Wednesday, August 21, 2013
A+ Pullback trigger
SPY: 15min going into the Fed minutes i wanted to See where all the Exchanges were sitting either on the Bid or Offer and which way they were Ranking, PSE was controlling the Bid while BATS was controlling the offer keeping price close to the Vwap and inside the 15min opening range, Reason for this type of Action was only 1 Reason: to Accumulate a position on both the long and short side, so from past experience i already knew they were out to Drive Prices to areas that will generate the Most volume, likely Areas that Have alot of Stops..lol.i hope you were not one of them. anyways back to my thought process so after i got and idea of what they are most likely going to do next, as a Pro Trader We always Default Back the our Levels, So i pull up my Level Charts to show me the Weekly,Monthly Support and Resistance zones and the Daily Moving Averages leaving out the Intra Day key levels as those level will not be able to hold price on a heavy volume day. Firts Level was located around 164.20-Weekly Support on the Downside, To the Upside We have two Level 1. Daily 50MA at 165.85 and monthly Price Action Pivot zone located around 166.30, My Bias automatically Shifted to the Bullish side as the Support area Was much closer to price then the Resistance area, After the Release we all expect a spike in either direction only to get HeadFake, We all had this happen to us before but we come to learn from it. So Next What i was looking for was a Spike Down as this was once again the closes area to existing price and it is the mostly likely area price will test first. So here it goes: Spike down, Tested Support,Triggering buy stops, Remember the area that is most likely to generate volume, So where is price going now that it has Tested Support, ohhh the Next Major area of Resistance,once again the Area that is mostly likely to generated the most volume, So we look to those levels Above us. 50MA bam price gets up there and Takes out the Sell Stops only to Sell back off to Support, Makes a whole lot of sense on Why The accumulation always Happens around the Vwap as that Area keeps you flexible to scale into a long or short position also allowing you to capture the spreads on both ends. As Traders we change our bias constantly so being able to see what is most likely going to happen is key as it will help you reduce your exposure to losing trades and allowing you to focus on the setups that only make the best sense to what you are used to. Good pointer is to only use the levels on the What already Happen Part and forget everything else. We are not Analyst,We are Traders or Risk Managers. With That said I hope you All can Learn from this post as it will Greatly improve your Mental thought Process.
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