YM traders should pay careful attention to every pyschological 00 levels. They act as significant price levels for traders and it is common to see price use this levels as support and resistance.
I want to go over how I play them and what I look for. The key to playing these levels is to watch for
price rejection. In an uptrend, the YM likes to violate these 00 levels by a few ticks: usually around 6-8 ticks. It becomes a bull vs bear fight around these levels. Whats important is to wait patiently and not pull the trigger too fast.
Price Rejection Around the 00 Levels
In an uptrend watch for price to violate the 00 level. What I do next is to watch for price rejection. Sometimes due to the momentum, sellers who planned to short at these levels may react to it a little late causing price lift towards 05 and upwards. Price rejection occurs when sellers start dumping above the 00 level and price suddenly moves lower below the psychological 00 print. So you would see: 00, 01, 02, 03, 04, 05. etc.. than BAM! back down to 02, 01, 00, 99, 98. etc..
These rejection is often a good confirmation signal for shorts to be placed. A strategy would be to place a short at around 97-98 once price lifts above 00. Basically you are trying to get in on the short side after a rejection. What I like about this technique is the risk. A 10pt stop would put your stop at around 07-08 making it a fairly low risk trading opportunity.
