Summarizing the Day Trades

Mar 31, 2008: 7:15 PM CST

The intraday index action today provided some ideal opportunities within the price structure that could have led to profits. Let’s check out the Dow Jones:

First, the day started out with a relatively small overnight gap, and the first play of the day was to fade the gap back to yesterday’s close.

Once that downside impulse was erased, it was time to switch to play back in the direction of the gap to target the day’s opening price – both trades worked very well.

As I pointed out earlier this morning, I highlighted the positive momentum divergence developing and commented that I suspected the day’s action could likely travel higher.

Price did indeed reflect up and burst through both yesterday’s open and the falling 50 period moving average.

At this time, a retracement against the strong impulse of the morning formed a classic “Bull Flag,” which happens to be one of my favorite trading patterns currently. The price retraced back to the 20 period moving average and formed a new momentum high, setting up both a ‘measured move’ play and my “Impulse Buy” trade. The target was a ‘measured move’ of the original flag which also corresponded with the falling 200 period moving average, which served as the intraday high.

Price then reversed off this level to test lower prices, and then created an unpredicted large volatility surge into the close which was resisted just as quickly as it started via the falling 200 period MA.

The day closed in the midpoint of the range, indicating a neutral bias between buyers and sellers.

Keep up with the idealized trades you viewed on your chart to help enhance your developing pattern recognition skills.

1 Comment

One Response to “Summarizing the Day Trades”

  1. Anonymous Says:

    i could learn more from your good charts if I could enlare those charts. Could you add that function?