Update on the FTSE100 trade.

Everything was in place on Wednesday for a long trade – the only thing missing was a positive market!  I never got filled and the position of the DTosc at close of trading Wednesday has resulted in the trade being moved back into AIM mode (of Ready, Aim, Fire analogy!) See chart below:

Aiming 1y

The chart above has now had to revert back to analysis and trade set-up mode – something I call for fun – AIM position.

There’s a few points to focus on in the chart above, first look at the DTosc – it was Bullish and then Wednesday’s price action forced it to turn Bearish in the OS zone – both lines are now OS – what does this mean?  Quite simply it means that we do not instigate any long positions until we have another BULLISH DTosc reversal – that and that only is our filter to FIRE into the trade.

Another point (looking at the chart above) is I’ve taken off the target levels – they’ve been invalidated by yesterdays lower price action – we do need to redo but we can’t do that until a lows in place, so that’s another quick 30 second job to do once the next DTosc bullish reversal occurs.

Another point is look at where price fell to yesterday and today – right between the 50% fib level (of A-B) and the green cluster zones projected down from B of the abc moves (previously discussed in another post) – those green zones down have not changed from previous – a bullish DTosc reversal in this zone signals a go long entry.

My only concern about this trade now is I’m worried about the state of the weekly DTosc position, by tomorrows close it’s likely to be Bull OB – that means we need to be very careful with this long – the next stage also is to wait for the daily DTosc bearish reversal to establish shorts!  So this is getting tight for a decision and potential.  So I’ll be happy with a 1:1 risk:reward return.  I have going through my mind – that if the weekly DTosc is about to rollover to bearish by end of Xmas week then price NOW might struggle to get above the high at point B (7th Dec 2011) – we just have to watch price action and see what it and the DTosc (weekly & Daily) do – unless some has a crystal ball and can tell me please? lol

Let’s have a look at the DTosc position as of close of market today Thursday 15th December 2011:

Look what we have!!!!!!  A Bullish DTosc reversal – we have no choice but to start preparing to go long.

The figures this time as shown on the chart are:  Entry = 5435    Stop = 5365 = 70 points

Now my entry risk is reduced from the previous entry – bonus – so I still plan to enter with £2 point but my initial risk is now only £140

Target = 5630 + 5703 (note the 2 fib targets clustering at 5703!)

Remember price can fail again – but what the DTosc is currently doing is fairly rare – unless momentum cycles are moving from the 8 DTosc to the 13 DTosc – again it’s just something we have to watch and if we take a trade money is at risk.

Please also notice that in between the current low and point B – I’ve measured the Fib levels of the move down – this is purely so that I can see how price reacts if it gets to those levels and especially the daily DTosc position – WHY?

Because if price is going to stall and reverse under the highs at point B – those are the typical levels it will fail at.  What I want to see is price slicing right up through it!

The overall picture of the chart is still slightly bullish but with the weekly DTosc nearing the OB zone – thinking forward to January 2012 – it might not be that good a start to the year as the weekly DTosc could have reversed to the bear side by then! – just something to be aware of

I’ll get this trade all set up to be filled at the market open tomorrow (8am UK time) and I’ll leave in place whilst I’m driving to the lakes.

Leave a comment

1 Comment

  1. Ok quick update before I pack up and finish for the day – I’m now in the trade, the trade went live at the market open with a stop set in at the lows (1 point below) – I’ll leave the trade running for the day and reassess prior to Monday’s open.
    I don’t intend to keep a running commentary on trades – it takes up too much time.
    The learning process for this trade for you should be the filters and decisions I make – not whether the trade works out profitable – I’m actually hoping the trade fails so that you can see that we have everything in place but the market does’nt agree.
    If we’re right and profitable 70% of the time we will be successful.


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