|
Quote: |
 |
|
|
o.k now we have 2 days of High to Low, hence for 5-11, Monday's probable price action, we should be looking for a Low violation to go long. |
|
|
|
|
that is right. however, given the location of the close relative to the intraday low, we seem unlikely to get that 'low violation' as we are actually closer to a 'high violation' than a 'low violation' given the closing price.
note we made an afternoon 'higher low' as there appeared to have been a wall of buyers down near 1503.00. when you build up a lot of volume low in the recent range and form a late afternoon 'higher low' --- this generally means the market will attempt to auction up next -- which aligns nicely with the 2 recent 'high to low' days.
So we are in the situation of having a bullish bias but we might get a 'high violation' first, which for
Taylor is short-term bearish. Thus, what do you do?
Plan B would set-up something like this (keep in mind Fridays closing price of 1517.75):
1) You get a high violation above 1520.50 into the mid-1520's, call it 1525.
2) 15-min 20ema closed near 1511 -- thus a big premium to that is short-term bearish as we tend to move back towards this EMA IF we start out really far away from it. 1511 + ~13pts = 1524.00 --- this might be a shortable level. (Note 15-min EMA will be moving up so call it 1524-1526 zone for now)
3) You look at support/resistance: this is not super clear but I do see a lot of past volume occured in the 1530-1532.50 zone. 1525-30 has been very 'noisy' (tricky) as well.
So if we trade directly up toward 1525-30 area, I would not want to be long and would consider a short but only for a short-term trade back towards the 15-min 20ema. (note this is just in the morning, as
Taylor likes to stress looking for 'morning reversals' on tests of key levels). If trades into 1525+ zone, right away -- then we 'could' have a 'high made first' and make the high for the day there. We also might just need to trade down from there to test lower before going back up for a 'low to high' day. But either way, the location slightly favors shorting there.
The better trade would be for it to trade back down towards the '15-min 20ema' and then potentially go long in hopes of a 'low to high' day. This is consistent with 2 high to low days, the Friday buying that occured low in the recent range and buying on a correction would be consistent with buying a 'higher bottom' vs Fridays low ---
Taylor talked a lot about buying 'higher bottoms'.
Thus my initial gameplan is:
Look to be a buyer on Monday as the day looks to have a constructive set-up,
but
in back of mind, consider a short if the market starts out 'too high' and play for a short-term trade back towards the 15-min ema - then potentially look long.
I think this thinking is similar thinking to
Taylors core concepts of:
'buying a higher bottom'
and/or
'buy day, high made first'
After that initial gameplan, its about reading the intraday action.