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Trading Patterns for Friday Afternoon 1/17/14

Friday afternoon going into the close had an additional 5 winning trading patterns and one small loss.

The 1^st trading pattern was an exhaustion trade which was good for 2 ¾ points.  As noted in the previous posts if you used the ZoneTraderPro statistics and created a trading plan you would’ve exited the trade at its maximum favorable excursion of 1837.75.  There was 14 minutes for you to adjust any target from the time the blue counter trend zone 1^st started to print, to when the market traded at that price.

The next trading pattern set up was an exhaustion trend trading pattern, which is the 1^st trend pattern following an exhaustion trade.  This trade had a great set up with a higher tick high and a higher tick low going into the trade, and only one tick of adverse excursion once you entered.  The trade however stalled out after only 6 ticks, so what went wrong?  The 1^st indication that something could go wrong is that the dollar is (and will continue to be) unfavorable to begin with, as indicated by the red background.  Just because the background is red however is not a reason to pass on the trade.  However when price reaches the red intermediate resistance zone the $TICK cannot make a higher high, and the selloff begins.

The $TICK in the lower panel is telling you that they cannot find the buyers in the cash market.  Additionally, when the market reaches the intermediate resistance zone there is euro divergence at that price.  At this point you should have considered moving your stop up to breakeven after the market had given you the 4 ticks a favorable excursion at the start of the trade.  What is also important to recognize is that there was high volume previously at the 1837 price level, and now all of these long buyers are underwater and looking to get out.

This sets up a great trend trading pattern, which has a lower tick low and a lower tick high going into the trade.  There is only one tick of adverse excursion in the trade is good for over 5 points.  So why did this trade end up being the best of the day?  This trading pattern had everything going for it from the start.  A strong dollar, lower tick low, a lower tick high, and a ton of long traders trapped in their position that are going to get stopped out.

This leads us into an exhaustion trading pattern which was an excellent set up, however was stopped out for a 4 tick loss.  Going into the trade, there was a higher tick high and a higher tick low which was TICK divergent at the low.  There was nothing to really indicate, other than the strong dollar, that this trade would fail.

This sets up a 2^nd exhaustion trading pattern immediately following the trade which has a higher tick low as the market tests the previous low.  At this point the euro is additionally divergent and favorable for the trade.  This sets up one last trend trade with a higher tick high and a higher tick low going into the close of the day.

Nice day all around!