Still thinking 2680-2690 for Monday? Get enough of a sell signal?
Hi Waver,
Good question. I'll do my best to answer clearly and take the opportunity to explain the signals, and trading system a little for future reference.
Yes, I got ST sell signals. But the signal is currently an 'early warning' and not 'confirmed' sell, which i'll explain.
The ST sell signal has about 10 indicators, and they go through a 'lifecycle' as follows, we'll start from them being BUY going to 'sell' and how it relates to actually TRADING them:
Step 1 - Confirmed BUY - Enter, with stop
Step 2 - signals move to TRIGGERED for SELL - this is the PROFIT EXIT ..where ur taking the maximum reward for least risk ( of giving some back).
Step 3 - Early warning SELL ( what we had late friday) - now risk of drop is rising ( giving some back), as often a pullback will appear ( as it did on friday)
Step 4 - Confirmed SELL (we do NOT have) - back to step 1 (except reverse for 'sell' instead of 'buy').
The reason I developed signals for those separately, is for me, I only want to trade Confirmed signals, and highest risk/reward trades, not try to catch every $.
>> So right here - the lowest risk part of the upmove is now over ( best risk/reward) according to the signals at least.
High odds, there is a MARGINAL New high:
i'll estimate 70% of time, we will now make another new high, but its small compared to previous move, we cd insert
Step 3.1 Pause/drop - either sideways chop, or pullback of 0.3 fib retrace roughly.
Step 3.2 make a marginal new high - usually about 0.3 max of the preceeding move ( in our case, say 2680-2690)
So summing that up - as a Trader there are two key probabilities the signal help me identify
1. The odds of a turn - 'buy' 'sell'
2. The risk/reward during the move from buy to sell, and sell to buy.
Right now - we are @ Early warning sell, and risk/reward is 'poor' for upside ..as the downside risk is large if we dont' get a secondary new high, which also isn't much higher
even though its odds on 70/30.
I hope that makes sense? let me know if it doesn't.
>>What would give a 'confirmed' sell is key - answer is PRICE.<<
Some of the indicators ( about 10) in the ST signal are not price based, but PRICE is the most important for confirmation.
Currently - confirmed sell is @ 2648
So a drop under that moves us to confirmed sell, that's a fair size drop from here due to the fast move we just had, usually its closer (if we get secondary move up it will be).
I'm Simplifying a bit - there are:
- other confirmations I use in real time, but price is the most important by far.
- i'm ignoring 'context' ..as a waver, you know about 'degree of trend', so my system has buy/sell signals for 3 key degree's of trend: ST, hourly swing, and IT.
Right now the hourly Swing is SELL ( as posted some time ago), and that influences reading of ST signal (next lowest degree) - how? its means buy signal are more likely
to 'fail', and sells more likely to work out, or right here, it means the buy signal is less likely to crack overhead resistance.
- calculation of where key pivots are ( the circles)
>>Important - Ideal trade occurs when we reach a Key pivot and get a Signal.<<
The key pivots are type of support resistance but calculated in a unique way, the circle area's, there are actual exact numbers that change in real time.
Our current position:
We crossed the first KP circle, and are below the 2nd (2680-2690), but with Early warning sell. What does this imply for monday?
- Highest odds: around 70%, we will run to 2680-2690 where i'm expecting to get 'divergent secondary sell' ( another complication I left out:
Step 3.3 - signals will show 'divergent' sell, or 'run on buy' ..its possible we get there and signals aren't divergent, in which case my pink path down from 2680-2690 is now 'wrong' and
I have to update with new paths - )
- Lower odds around 30% we fail to reach it, if that occurs, usually we get a steep fast pullback but then another runup attempt because we didn't 'complete the setup'.
This shows danger or FRONT RUNNING a signal WITHOUT A CONFIRMATION - which I won't do. Hence I said friday this is NOT a good sell setup, because
we don't have the ideal setup up - reaching a decision point ( the circles), AND a Signal which is confirmed. PATIENCE is the key here. That is a risk profile choice,
a trader willing to sit through big moves against them cd take the early warning signal here, I prefer not to, especially if positions have to be taken near cash close!
Bottom line -
- I see high odds about 70% a sideways move or drop monday to max 2648, then a secondary high 2680-2690 which i'm then seeing a very high odds ST sell.
- if we break 2648 (with signal confirmations) - then I have confirmed sell, and not looking for thst move up yet, but can still come after a ST sell.
Stepping out one degree of trend - I was expecting this move up to lead to large move down, but, it's possible we need to spend more time in a more complex pattern here,
I can't tell yet until seeing mondays pattern.
Edited by Entropy3.0, 05 May 2018 - 12:09 PM.