Intraday Trades of the Day

While today’s action provided a lot of opportunity for nimble scalpers and day traders, there were some key ‘classic’ patterns that unfolded today that I wanted to view closer here.

1. When there’s a gap in the Dow that’s less than 100 points, the first play is always to FADE that gap and play for yesterday’s close. Today, that worked perfectly.
2. The ‘plunge’ mid-day wasn’t anticipated, but wasn’t all that unexpected, given the downtrend in price.
3. A nice divergence set-up and a perfect Bull Flag occurred around 2:00. The target was achieved perfectly and coincided with the 200 period MA.
4. An “impulse buy” trade then set-up (not labeled) which also exceeded its target.
5. A divergence occurred which achieved its target (again, not labeled).

I did want to focus a bit more on the Bull Flag.

Notice how the initial impulse (which set-up a new momentum high in the oscillator) was faded back to:

1. Yesterday’s close (a strong support/resistance level)
2. The CONFLUENCE of the 20 and 50 period moving averages (a “super-support”) zone.

This, along with the initial gap fade, was one of the highest probably trades that occurred (set-up) today.

You can never predict initial momentum (or price) impulses, but you CAN anticipate patterns that form as a result of them (such as the bull flag target above or ‘impulse buy’ trades which play for the previous price high).

Use today’s index action as a guide for the future, and always edit daily charts that highlight ideal trades you would have taken (or did take) based on your system and interpretation of price action.