Tuesday 9 April 2013

Beautiful Set-up

Today we can see a beautiful set-up to go long, which I took, and made my 20 points profit.  This is the perfect set-up for a long trade, and something we see time and time again.  Below is a 30 minute chart of the Dow Jones.  The set-up was also visible in the 10 and 20 minute timeframes.  At Point A we see an ultra-high volume down-bar - possibility of buying, which is confirmed by the next bar being an up-bar.  Then at Point B the market comes back down into the area of high volume at Point A, but the volume is low (less than the previous two bars), meaning that supply has dried up.  The market has only one way to go - and that is up, which you can see!

I intend to stay in my trades longer when I see set-ups like this in the larger timeframes.  It is a matter of confidence.  I'll get there.




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2 comments:

  1. Eddie10 April 2013 at 02:52

    I found it difficult to buy at Bar B, as the spread is still wide, and the volume at Bar B is only a tiny bit below the previous bar.

    I understand the low of Bar B is at the close of Bar A, and the bar itself is well off the low, but I do not have the confidence to buy at that bar.

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  2. Unknown10 April 2013 at 10:26

    Hi Edmond,

    I understand what you are saying. But keep watching the market and you will see this set-up time and time again and maybe have the confidence in the future to trade it. I prefer to see the market turn around (ie. rise) and then look for a test in a lower timeframe, ie. 10 or 15 minute. Tom Williams would go long at Point B and put his stop under the low point of Point A. It's all about confidence! On this occasion there were clear signs of testing and shakeouts in the lower timeframes - plenty of confirmation of the bullishness. It's good to have all the odds in your favour, ie. signs of strength in various timeframes.

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