Pivot Points - Large Round Bottom - PIC

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1. Date: 2008-11-17 16:14:41
Subject: Pivot Points - Large Round Bottom - PIC
From: Asher <a...@n...net.il> Search message by this author

BS"D

PIVOT MAGIC TRADING JOURNAL - EXCERPT

Morning and lunchtime trading taped a particularly Large Round Bottom
Reversal pattern.
We did all right on both the down side and the upturn. Sorry to have
had to let the EOD
45-point monster dive go by though. Sigh.

The market is still hovering at a potentially significant precipice.
Therefore, a red flag warning remains in effect.

CAVEAT
Now is a good time for paper trading and practice.
Read and heed NOTES A & B, below.

RED FLAG WARNING

NOTE A: The ABS has been bloated for several weeks. Should bloated
ABS conditions continue,
high-wind warnings, and precautions apply. To avoid getting stopped
out at every Price
adjustment, expand the Pivot Magic Trading Maximum Profit Giveback
(MPG) and stop
placement spacings.

To reflect the ABS, and to avoid sudden-death Price Action swings:

* MPG limit needs to at least as large as, or larger than, the average
candle.

* Stop placement (still applying our PMT stop rules) spacings backs
off by to approximately 1/2 ABS.

NOTE B: The expanded spacings obviously make for greater risk
exposure. Of course, the
profit-per-minute potential increases as well.

* This represents an acceptable threat to well-funded Advanced
traders.

* Intermediate traders might wish to trade fewer contracts than
usual. Put less of your funds At Risk.

* Beginning PMTers might be wise to sit out the fireworks.

While the market is excited (ABS is large) and skittish (Price Action
is basically sideways, a minefield full of
traps), every small hiccup "scalp" travels a dozen points or more, in
minutes. Observe how careful
application of the PMT rules, nerves of steel, close attention to the
tape (and our primary indicator, Volume),
together enable the (well-funded and) experienced PMT trader to avoid
traps, and to even profit from the
occasional "accidental" blips. That said, let us proceed.

****************************************************
***

E-mini
Friday Nov 14, 2008

Morning session opens gap-down and immediately strikes out to close
the gap.

1 = The approach to the Close meets with severe interference at the
light blue dashed line of S/R (Previously called the floor of LT SW
Channel,
this level currently seems to be acting as the ceiling of the next
lower LT SW Channel corridor.). Large red Bear Dragonfly spike off
the blue
dashes. A nice "P" Reversal signal.

A = Pulled in on a giant red candle through the MA (making this a
failed test of MA with both plungers pulled back, a classic slingshot
of the MA)
and LowW. Advance the initial stop above LowW for an instantly
profitable position. Yes!

B = Large red candle. Per our PMT stop rules, move the profit-locking
stop above the high of the candle.

C = Large red Bear Dragonfly puts our position in violation of MPG
rules. Mental stop at Giveback level.

D = Large red candle and our position is again in MPG violation.
Mental stop at Giveback level.

E = DVS (pink arrow) drives a giant red Bear Dragonfly toward the
Pivot. MPG violation tells us to place a mental stop at Giveback.
The DVS
(late in the move) warns us that Momentum is all but used up. Think
Pivot Scalp exit techniques.

F = Second DVS (pink arrow, possible Twin Towers) only generates a
small spike/tap barely through the Pivot. Pivot Scalp exit when
touched.
+/- 21 points

[SNIP]

4 = As a mid-air 2-bar, this is reversal is untradable.

J = The repeat DVS assaults on the Pivot during TGIF lunchtime gotta
be TELLs (blue arrows).
NOTE: By 1:30 the day's Price Action has formed a large Rounded
Bottom pattern. For me, the Biggest question with this pattern is
always,
"where exactly is the breakout level?"

5 = Now that's pretty! A 123, failed retest of the Pivot and MA
completes as a large white Bull Dragonfly.

K = The TELLs give us increased confidence as we are pulled in on a
large, white, inverted (Bear, not the greatest follow-up sign)
Dragonfly.
Advance the initial stop under the low of the candle, reducing
undefended At Risk.

L = Test of the MA Resistance-turned-Support fails on a large white
candle. Personally, "free trade" is the preferred profit-locking stop
placement,
but beginners move the profit-locking stop under the MA.

M = Large, white, inverted (Bear) Dragonfly. DVS (pink arrow) makes
this doubly worrisome. Per our stop rules, zip the profit-locking
stop under
the low of the candle. Prepare to exit.

Small, red, spinning top, breather candle. Exhale, stay poised, but
ease your finger off the trigger a bit.

N = Strong DVS (pink arrow) blasts a giant white candle through the
LowW. Position is obviously in MPG violation. Mental stop at
Giveback level.

P = With the light blue dashes and the closing of the opening gap both
in reach, one might well have weathered the stop-challenge from red
Bull
Dragonfly tail. No matter, the spiking Bear Dragonfly is a Higher-
High-Turns-Red. That is one of our Exit Now! signals. +/- 12 points

[SNIP]

7 = Exactly 3:00 Reversal time and the tape shows a monster reversal
signal Behind/At the Close.

This is a trap. Hope the following spike didn't pull you in. How did
we know it was a dud? We never trust DVS-based 2-candle signals for
longevity.
Once again, we were saved by our rules!!!

Price Action continues (orange oval) to trace a Violent Multi-top
through the Close. The light blue dashes are theoretically semi-
permeable and will
let the Bears through, but the Volume looks like a zebra stampede so
since time for placing the last PMT entry order has passed, nada.

There it is! A perfect 123 breaks through the blue dashes (green
arrow) and . . . And nothing. Look at the clock. It is EOD Hiccup
Danger Time.
No entry for us.

S = This is where I shouted, "Arrrgggghhh!!!"

T = This is where I let out a whimper.

V = This is where I again shouted. This time I hollered, "Aw come
on!"

X = Check out the Volume (pink oval) as the BBs all get square for the
week, and make some change for the weekend festivities to boot.
This is also where I started giggling uncontrollable, and very (yet
again) seriously committed to start back testing, looking for a risk-
conservative
way to trade the Hiccup (don't really think there is such a thing
though).

PERSPECTIVE
(Daily, bottom chart)
Friday's Bear candle makes it hard to conclude that the Bears have
given up on the TTT attempt
at the contract low area (dotted plum line).

Sure glad we're day traders, cause this kind of stuff is real hard on
the portfolio accountants!

REMEMBER: Trade the tape, not my prognosis!

Asher
=] ;-)>
Pivot Magic Trading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%2
0Trading.html

Friday's PMT Chart:
Http://www.TradingThingys.com/PMTJ/PivotMagic111408.
gif