Also see the 1 hour chart below. This is a good illustration of why we must be very cautious at the market open, and why I would not want to be in a trade before the market open. The bar at Point X, you would think, is a test. The programme has put up a signal saying this. However, beware the volume is not less than the previous two bars, so this means there is some supply in here. But to the eye, the bar looks like a test. You may think this will influence the market, but the next bar, which is at market open, is a trap upmove (serious sign of weakness), and the market has fallen since. So beware trading at the market open. Because of the volatility it can be very profitable, but it is also very dangerous. There are traders who do trade at the open, and make good money, so I'm sure it's possible. But my aim is to avoid too much stress! If trading becomes very stressful we build a negative association, which is detrimental to our success.
Hello Rita,
ReplyDeleteVery nice trade! I say that because of your decisiveness. Had you wait for one more bar the trade would be too late.
I find it very interesting that on the second chart price have a difficult time to get through R1.
Onto another question, on the hourly chart, if the bar on the far right closes as it appears right now, would you consider entering a short position on the bar?
Hi Edmond,
DeleteNo I would not short on that bar alone. Yes, it's a sign of weakness, but I would look for confirmation of that weakness, usually on a lower timeframe. So if I see a no demand in, say, a 10, 15, 20 minute chart I would definitely go short.