Datetime: 23 Feb, 20:47 Berlin Time
What is the current state of price movement in the trading time frame (4H)?
It looks like we are just concluding the second leg of the downtrend (including pullback) and just starting the third leg. Pullbacks are lasting for 3 bars approximately. The current pullback is also testing two important levels simultaneously - the important level at 8181.1 and the descending trend line. The descending trend line was breached but was conquered again in the pullback.
Since it's only the second leg of the pullback and no serious upward momentum has emerged, odds are that the trend will continue. But assuming 8181.1 to 9426.5 is a range, we have Wyckoff spring like action near the bottom of the range, indicating that this is an accumulation level, indicating that the price will go up from this point onward.
What is the current state of price movement in the trading time frame (1D)?
Looks the same as the last analysis on 21 Feb. There is a breakout of both the descending trend line and the level at 8181.1. But it isn't clear yet if it is a successful or unsuccessful breakout. The bar after the breakout is green, indicating that the breakout is not clean.
Odds are that the uptrend continues (and the current downward movement is just a pullback - note that there is no significant new low in the MACD) or becomes a range between 8181.1 (most likely) or 7418 (less likely) and 9426.5.
What is the current state of price movement in the trading time frame (1H)?
The 1H timeframe tells a different story. In this timescale, it seems that there has been 3 pullbacks already in the downtrend. The penultimate pullback already looks questionable, with significant high momentum and the fourth leg was prematurely interrupted to give rise to a sudden upward movement which showed up as a significant new high in the MACD. This indicates that the downtrend has run out of steam and we will see an uptrend.
Most likely, the last upward movement is the first leg of an uptrend.
What trade is most reasonable in this situation?
Let's start with the higher time frame. As we discussed, continuation of the uptrend or a range is most likely in the cards. The trading time frame is inconclusive. The lower timeframe indicates that the downtrend has stopped, in which case, this is the end of the pullback or indication that 8181.1 is holding as support.
Given this information, an "anti" trade seems reasonable and we seem to be in the right pullback at the moment.
The pullbacks are supposed to last for 8 bars, and we are in the 5th or 6th bars, which should be reasonably close to a good level to enter the trade.
What about the stop? The stop can be placed beyond the last low at 7800, perhaps at 7600 (because the most important action that happened near the level 7800 is a range between 7800 and 7679.
If 7600 is the stop, the first profit target should be around 8600. If the trend continues, we can try to extract more profit.
What market structures might emerge which contradicts the rationale behind the trade?
If sharp downward momenttum emerges now, that indicates another downward leg might happen. The current bar should not be able to close too far away from 8181.1, wait and see till 22:00. If it does, well it doesn't completely contradict the trade, but doesn't support it either. Then wait for another bar to see if upward momentum emerges. (Okay, at 22:00, we have a Wyckoff spring, so that's a good sign)
Trade that I executed:
Time of entry: 22:07 Berlin time
Type of trade: Limit buy
Direction : Long
Trading Pattern : Anti
Entry : 8133.8
Stop Loss: 7550
Take Profit: 50% at 8650 (conservative end of next trend leg) and 50% at 9426 (since this is the next important level, the uptrend should get it there after a few legs)
Results will be posted when the trade concludes.
Disclaimer: This isn't trading advice. DYOR.
What is the current state of price movement in the trading time frame (4H)?
It looks like we are just concluding the second leg of the downtrend (including pullback) and just starting the third leg. Pullbacks are lasting for 3 bars approximately. The current pullback is also testing two important levels simultaneously - the important level at 8181.1 and the descending trend line. The descending trend line was breached but was conquered again in the pullback.
Since it's only the second leg of the pullback and no serious upward momentum has emerged, odds are that the trend will continue. But assuming 8181.1 to 9426.5 is a range, we have Wyckoff spring like action near the bottom of the range, indicating that this is an accumulation level, indicating that the price will go up from this point onward.
What is the current state of price movement in the trading time frame (1D)?
Looks the same as the last analysis on 21 Feb. There is a breakout of both the descending trend line and the level at 8181.1. But it isn't clear yet if it is a successful or unsuccessful breakout. The bar after the breakout is green, indicating that the breakout is not clean.
Odds are that the uptrend continues (and the current downward movement is just a pullback - note that there is no significant new low in the MACD) or becomes a range between 8181.1 (most likely) or 7418 (less likely) and 9426.5.
What is the current state of price movement in the trading time frame (1H)?
The 1H timeframe tells a different story. In this timescale, it seems that there has been 3 pullbacks already in the downtrend. The penultimate pullback already looks questionable, with significant high momentum and the fourth leg was prematurely interrupted to give rise to a sudden upward movement which showed up as a significant new high in the MACD. This indicates that the downtrend has run out of steam and we will see an uptrend.
Most likely, the last upward movement is the first leg of an uptrend.
What trade is most reasonable in this situation?
Let's start with the higher time frame. As we discussed, continuation of the uptrend or a range is most likely in the cards. The trading time frame is inconclusive. The lower timeframe indicates that the downtrend has stopped, in which case, this is the end of the pullback or indication that 8181.1 is holding as support.
Given this information, an "anti" trade seems reasonable and we seem to be in the right pullback at the moment.
The pullbacks are supposed to last for 8 bars, and we are in the 5th or 6th bars, which should be reasonably close to a good level to enter the trade.
What about the stop? The stop can be placed beyond the last low at 7800, perhaps at 7600 (because the most important action that happened near the level 7800 is a range between 7800 and 7679.
If 7600 is the stop, the first profit target should be around 8600. If the trend continues, we can try to extract more profit.
What market structures might emerge which contradicts the rationale behind the trade?
If sharp downward momenttum emerges now, that indicates another downward leg might happen. The current bar should not be able to close too far away from 8181.1, wait and see till 22:00. If it does, well it doesn't completely contradict the trade, but doesn't support it either. Then wait for another bar to see if upward momentum emerges. (Okay, at 22:00, we have a Wyckoff spring, so that's a good sign)
Trade that I executed:
Time of entry: 22:07 Berlin time
Type of trade: Limit buy
Direction : Long
Trading Pattern : Anti
Entry : 8133.8
Stop Loss: 7550
Take Profit: 50% at 8650 (conservative end of next trend leg) and 50% at 9426 (since this is the next important level, the uptrend should get it there after a few legs)
Results will be posted when the trade concludes.
Disclaimer: This isn't trading advice. DYOR.
Comment:
I posted this slightly later than doing the trade. Reason being, I told my flatmate that I will watch a movie with him (Heavy Metal Part 2). I posted this after spending quality time with him. I guess this is excusable given it's a Friday ;-)
