Today is one of those days where I dont realize how important it is to understand macro technicals and I paid a large price for not realizing where the macro momentum laid. I cant really emphasize how important it is for me to just constantly be remembering and reminding myself that the macro picture is always the #1 and when we are in the opposite of that structure in the micro form, then there is potential for massive home runs days. These days are extremely rare but when they occur you can expect anywhere from 8R-10R on pretty much any trade with the trend. I recognized this way too late in the day.
1d:2m (Webull Trades) Trend Reversal Short
- Doesnt look like a bad trade does it? I took a large piece of the move so far on the day. I basically shorted near the high and sold right at the low of day. Well look at this chart:
-See those tiny arrows at the top of an 8 point drop? yeah that is my trade.
How did I miss this opportunity?
Somehow I didnt notice or understand the potential downside. Lets go through the original though process:
MACRO- Downtrend
- When the market is in a macro downtrend we should expect consistent lower highs and lower lows. If you look to the right of the chart you can see that the last lower high was not followed by a lower low. This means that we could enter a ranging market. When you have lower highs combined with higher lows or higher highs and lower lows then you are in a ranging market. Ranging markets do not continue in one direction strongly most of the time. They do eventually breakout but not after many attempts at the bottoms and the tops of the range first. When in a macro bear market that is ranging, the best trades will be to the short side. As you can see up here there are not many times recently where the SPY broke down from the top trendline in a slow manner. The first 2 lower highs slowly fell off then accelerated about a week later. The 3rd and 4th lower highs really are getting sold into heavily. I should have noticed that the last lower high was a big fakeout to the upside and this one was probably going to be another large drop and or fakout to the upside. What is the next step?
MICRO- Uptrend
