fig.1 (Stats)
fig.2 (30m)
fig.3 (5m)
fig.4 (VOLD /ES & /NQ, ADD, TICK)
fig.5
fig.6
1. The big picture
a. The market is in fear mode since we have earnings of all of the major companies this week. The institutional derisking is evident in the price action of the offensive sectors. Going into today I thought the market would be choppy and not really offer a true trending day like it did. I thought that since there was a lot of uncertainty that there would be no directional moves. I was vastly wrong. From my entry we moved another 30 points lower. Massive missed opp.
2. Technical Analysis
a. As you can see in fig.3 we have a very nice channel formation in the premarket where we hit the upper bounds, selloff (making lower highs) then we hit the lower bounds and consolidate sideways until failing again at the upper bound (making more lower highs) and selling back down through to the bottom of the channel. This is a beautiful example of a channel that is clearly defined. As you can see in the fig.2, the 30m channel is also clearly defined and it is also downtrending. When we have the 5m and 30m channels both downtrending, youd have to be crazy to not take a short somewhere in there.
3. Volume
a. I took this trade right when the market opened so I was not really using the Depth to gauge how this price action would form but as you can see in fig.4 the market was heavily negative in all regards. TICK never made a +600 value, VOLD was heavily red on SPY pretty deep red on NQ, ADD sold off huge at the open and continued to sell off later on in the day.
4. Trade Strategy/Management/Review
a. The entire strategy is, follow the 30m channel and when the 5m channel is doing the same thing, take the upper bound of the move to go short and target the midline of the channel. While I do like this strategy I think there are a lot of factors that make me think that this was not really THAT good of a trade. Yes I am using a new 5m channel strategy so I wasnt supposed to hold for a massive move but go look at fig. 2 and you will see the 30m channel continuation was BEAUTIFUL. I shouldve entered on the 5m channel and then managed from the 30m channel. If I had done that then I wouldve have given one shit about a 10 point move or having a target at midline of 5m channel. We had tons of room to the downside and I should have held that trade.