1d:2m
-Today I did a few thing incorrectly
1. Overtrading
2. Did not trust "Trend"
3. Sized too far down that need massive targets
Lets Zoom out
1d:5m
-We have clearly a very choppy day hwere but the more you zoom out the more you see an actual "trend" occuring. The last 2 days have been the biggest red days in the past 1.5 months so it is expected to have some chop to follow it up not to mention that we have PPI CPI and Hikes this friday and mid next week. Since that was the case today I was expecting there to be not much followthrough on the buy or sell side.
1yr:1d
10d:30m
-Perfect breakdown through the range now we are consolidating at the bottom of that previous range. The market is not broken from the daily uptrend though and we hit the top bound on the descending channel downwards so we should be expected to be bearish from here on out.
2d:10m
Lines: Uptrends within Backside move
Rectangles: Areas for potential entries
-On the left of the chart we have yesterdays price action which is clearly extremely strong to the downside. We have lower highs and lower lows over and over again with massive moves to the downside.
-On the right of the chart we have todays price action which is clearly NOT strong to the downside. We have buyers available and there are consecutive higher lows but also there are lower highs. This is the definition of range. When we make higher high and higher low that is Uptrend, Lower high lower low is Downtrend, Lower high with higher low or vice versa, Higher high lower low, is what happens when a stock is perfectly in balance. Today we still have at least 3 opportunities to take shorts where you couldve walked away with 10 points taking lower high setups.
Zoom into todays chart
1d:5m
I have 4 labels here with various places that entries could be taken. A,B,C, and D. On A we have the most obvious entry in terms of "Lower high - lower low setup" because we are below the high from the opening candle and we failed quite epicly. Although this entry wouldve been great it is somewhat unreplicable because the first high on the day should not be trusted that strongly since we broke out of a lower high from yesterday thus damaging the structure of the descending trend.
B: This is a very very hard entry to take. The reason is because we made a higher high. Again once a higher high is made within a lower low and lower high setup then we can assume that the structure of the previous strend has been damaged.
C: This is the best entry of the day by far. The reason is because we are making a lower high below entry point B and entry point A. Although this is the nicest and highest EV entry of the day it is still very difficult to have confidence in when we created a higher low on the drop from the first entry of B. This could have easily broken back above entry A or B and made a higher low higher high setup but instead since we are in a strong downtrend this just made a higher low and a lower high thus signalling range is very much in play.
D: This entry is better than B and A but not as good as C. Although this entry is somewhat nice because if you used the Entry point of C to use as a basis for where to enter on D then you would have nailed this trade. Let me explain:
-These rectangles represent where we rallied higher then failed and broke the small uptrends within a bearish move. See how Entry point C is right above the break zone? Now look at D and you will see the exact same thing, Same with that later entry in the day that is unmarked
Takeaways:
Instead of trading within these small ranges after big breakdowns and breakouts, ZOOM OUT. If I had zoomed out and been patient for the C entry then I really couldve identified how the market was structuring and I could identify that since we are making a range BUT are still using momentum from yesterday to breakdown any breakout, I couldve taken these tops with slightly more confidence. Those clumps of trades in the center of the chart are hideous and quite awful. Again since we did not make an immediate lower low on the first drop of B then I shouldve known we are ranging and to buy bottoms and sell tops. It is always smartest to follow the prevailing macro trend which is now bearish considering the fact that we broke down on the daily and broke the uptrend on the daily.
