FTSE 5 minute chart on 15th December 2016
In my trading I look for good risk and reward trades in the right context areas. If I get the right signal in the right area this gives me an excellent probability of success in my trade. I look for the market to react in a way that makes sense to me at certain points in the day and at different levels. Taking good reward to risk trades with good probability is what trading is all about.
Yesterday I got nothing in terms of trades and I couldn’t work out what was going on. The intense trading range created the confusion. Today was much better and the action made sense to me as a result it produced several good trades.
The market opened below the close of yesterday. This creates a gap on the chart (not visible due to pre-market action) and when the gap is fairly small it normally closes. It did today, however it took a few hours.
The FTSE set off inside our bear channel. It produced a two bar reversal at the top of the channel in early trading. This was just about worth a trade to the bottom of the channel and worked out ok. The market hit the bottom of the channel after 30 minutes or so.
I didn’t get any signals at the bottom of the channel to trade to the top so I didn’t get a trade for that move.
Just before midday we broke out of the bear channel and this breakout closed the opening gap. After the gap close the market pulled back to the top of the old channel. We got a bullish Pin Bar just above the upper channel line. This was the signal that the market was going higher.
The FTSE did move higher and it made my target of reaching the 7000 level just before the close. A lovely 5:1 reward to risk trade to finish the day. More days like this please Mr FTSE! :)
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Pre-market trading analysis 15th December 2016