nicker

Frog-Kiss Short Russell

Short
ICEUSA:RJ1!   None
0
I call a trade a frog-kiss trade if the potential reward is huge and the necessary stop is very small. Because of extremely high R/R, the percent win rate can be as low as 30% and still give huge profitability. The Russell 2000 futures had a 5 wave up Nov 16- Mar 15, followed by an ABC down, where the B wave retraced all the way to the highs. This is much more common in a major trend change than in a corrective ABC followed by additional uptrend. If indeed it were a trend change, then the C leg down may be W3 of an impulsive five wave down, or w1 of W3 down. This C leg down ending Apr 18, was followed by a 5w up, and this is where we are now. That 5w up may either be the first leg up of a new impulse going to major new highs, or it may be the end of a complex w2 up, which could be followed by a strong downtrend. While many other things suggest continued strength upward, three things make this a perfect spot to risk a frog-kiss, as it won't hurt much, and could turn into a prince. 1) the wave count described could go either way, but actually favors down, 2) price touched just 113% of the price delta Apr 11-18, a classic bull trap spot, 3) H&S in the last 4 hr of May 6. A stop at 958.7 is cheap insurance for possible targets of 949.7 or lower. Frog-kiss trades also offer great opportunities for SAR, if the alternate scenario rules.
Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.