This commentary will focus on the first 60-90 minutes after the Opening Bell. However, our strategies can and will provide setups the entire trading day.
Overnight price action continued to consolidate near intraday lows and found minor support after the “free-fall” during normal market hours. With price action breaking below multiple prior day’s lows, we had very good weight-of-evidence of weakness yesterday with price action below the opening bell, below the 20MA and a multiple day market cycle phase 4 with lower highs and lower lows. Yesterday was great example of a Starbucks trade.
Notice with markets so dominant, it was easy to trade the market cycle phase 4 on the 1 and 5-minute charts for multiple day’s profits.
From a birds-eye view, the continuation of the market cycle phase 4 was provided by the multiple day flag pattern before price action crossed below multiple day lows.
Pre-market Economic news and reports starting to pick up with more reports, so we want to be concern for any impact the news causes.
Pre-market price action on the 5-minute charts have slowly retraced off the overnight lows and slightly above the prior day’s lows heading into the opening bell.
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With price action consolidating and very choppy on the 1-minute chart, we waited for the 5-minute charts to confirm closing near the prior day’s low, took aggressive trade SHORT. Use a breakeven strategy to manage the trade and then trailing stops after retracement for the bigger move. Took 6+ points profit.
Hint: Notice how price action remained below the 20MA the entire time of our trade!
We had several winning trades yesterday as well (i.e., not at my normal location so could not capture snapshots of trades).
Review all of our trades in the Quick Hits For Fast Profits Summary table…
With clear evidence of a market cycle phase 4, price action below the opening bell, below the prior day’s low, below the 20MA and lower highs and lower lows on the 1-chart, we took another aggressive SHORT after the flag pattern retest and lower high. Took 2+ point profit.