Here is my take on today’s action for the Russell 2000 futures:
I have included a screen shot of my daily journal to give you an idea of what I’m thinking before I start trading. The journal is created the night before and the parts I add after that are the pre-market notes, and the Wrap up of the day.
Orange arrow- After a few tests down the market is able to rise with some conviction. Notice that the third candle of the day forms a doji like candle and the candle after that prints higher. That is an important indication on momentum shift. A long placed here has fair placement but higher than average risk.
Yellow arrow- The market pushes up to meet supply and long liquidation here but the market still remains technically bullish until the lows of the 7th candle in are broken and closed below. Taking half of your position off could be a wise decision here as there are no certainties only probabilities at the right edge of the chart.
Blue arrow- the market tightens and forms a doji on lower than average volume. The volume is slightly higher than the previous candle but that is favorable for a long bias because the spread is higher! Once again the market closes above a doji signifying momentum to the upside is still present. Close only stops are ideal below this newly formed structure.
Green arrow- After drifting downward from finding no fresh demand that market once again finds volume near the previous days high. Volume increases, spreads lift, and an engulfing pattern is made near 50% of the prior move. This is Ideal for a long trade.
Pink arrows- The market offers two very short, very shallow opportunities to add to your position and/or move your stop orders just below them. Look at the volume, there is no supply being found by the market!
White arrow- Lastly, after a 50-60% pullback the market finds demand that prints as higher than average volume with higher spreads (closing off the lows).
I wasn’t present for the market action during lunch (the slow move lower between 10:15am and 11:00am CST) or the last move of the day, so I cannot comment on the moves after that. Hopefully this helps somebody out…
