ES Trade Plan for Jan 22 2014

We have now closed within 6 points plus or minus of  of 1835 for 15 of the last 19 sessions. That’s what I call a trading range.This is getting a little old, or at least repetitive. My ES trade plan for tomorrow is essentially the same as it has been the last week.

one million dollars

Where We Are Now

To me, these are the important things to note:

  • 5D ATR is 15.66. What that means to me is that I expect a “normal” day to have a range of about 16 points.

We have established no new support/resistance areas. They are the same one’s I’ve been identifying almost all year:

  • ATH at 1846.50 – Major resistance
  • 1838
  • 1833
  • 1828
  • 1818 – Major support
  • 1810
  • 1802-1800 – Major support

(See here and here and here.) We closed at 1837.50 – half a point from one of my S/R lines. This is a popular area!

Since I know the 5D ATR and have my price areas identified, my trade then needs two more pieces of information:

  • Is there a trend and if so, what direction is it moving?
  • Is there sufficient range left today to have a high expectancy of making money?

I expect us to challenge the ATH any day now. However, there’s not been much enthusiasm to support prices at that level. Since we’ve been very close to the ATH for the last week without seriously challenging it, I am inclined to believe we are more likely to test the lower value area around 1818.

I still expect at some point we will test the major support at 1800, but the longer we avoid it, the lower the likelihood, IMHO. However, that major support under us at 1818 is not far outside of one day’s normal range. So if we start to get momentum downward, 1818 is clearly in play. And it wouldn’t surprise me to see one of those “double range” days again soon which would bring 1800 into play. The “pattern”, if you can call it that, the last few weeks has been several days of small range broken by a single big-range day, only to start the process all over again.  For me, the only way to take advantage of that is to plan where I want to trade, and wait for that particular setup to occur.

My Trade Plan for Tomorrow

The places I can enter a trade, assuming we haven’t put in a huge range like we did last night, remain the S/R points. Targets remain the nearest S/R points from the entry. With that said, I am unenthusiastic about entering a trade at 1833 because we have S/R points within 5 points above and below. I prefer to get bigger chunks on a trade. I will do business LONG at 1838 targeting the ATH, or SHORT at 1838 targeting 1828, (like I did late last night.)

Other entry points are LONG at the ATH with a target of whatever is left of a normal range for the day. I consider this one currently unlikely, but everything could change in the next 12 hours. SHORT at the ATH with the same qualifier, but better targets of 1838. 1833 and 1828.

Finally, LONG at 1828 with target of 1838 & the ATH, or SHORT at 1828 with a target of 1818.

I always set my Stop Loss Trigger to be roughly 1/3rd of my expected profit on the trade, so if I expect to make 10 points, my Stop Loss Trigger will be 3.25 points.

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