Thursday 30 May 2013

X Marks the Spot

Nice simple one today.  I went for 10 points, as I doubled my investment this time, and chose the no demand in the 5 minute chart, labelled X, below.  It was perfect because I made my money in 4 seconds, so no stress or waiting.  This is why it's important to me that I pick the right time to enter the market.  If you look at the bar at Point A you will see it has a very wide spread, and the volume is very high (meaning supply).  Also, it is approaching and fails to penetrate the resistance level above.  The bar following it is a narrow spread bar with reasonable volume (not low), and that also fails to penetrate the resistance line above.  The narrow spread and average volume means that the professional money are capping the market - selling into the buying.  There is clearly reluctance to go above that level.  The next three bars are down, confirming this, then at Point X we see what we are waiting for - no demand - up-bar, volume less than the previous two bars.  There is little demand for higher prices, hence the next bar is down, which is where I took my profit.


Wednesday 22 May 2013

Easy Day

See the 5 minute chart of the Dow Jones below.  Point A signifies a test in a rising market - classic down-bar, narrow spread, closing in the middle, volume less than the previous two bars.  I went long at this point and, as the title to this blog suggests, it was not particularly stressful!  The market responded nice and quickly to this test and I took 25 points profit.  I exited the trade at this point for a few reasons - 1. 20 points is my target, 2. the bar was approaching a former level of resistance, 3. the half hour bar was about to finish, and the volume on that bar was extremely high (due to the News action at 3pm), which could have meant I would have watched my profit diminish which, as I write, is exactly what has happened - the half hour bar appears (at this moment) to be turning into a top reversal and a possible indication of weakness.


Monday 20 May 2013

Nice Test

The chart below is a 10 minute chart of the Dow Jones.  Notice at Point A we see a classic test - a down-bar, closing near the high, and the volume is low (it is not less than the previous two bars, which is what we would ideally like to see, but the fact that it is quite low and the bar has dipped down only to close near the high is a good indicator of strength).  Also, this test appears just after we've seen weakness on the previous bar.  Point A is testing the supply on the previous bar.  It has discovered there are no sellers, so it is a successful test and the market rises.  I took my 20 points profit, thank you very much.  Off for a bath and an evening out.