Pattern Trades 12/05/13 – 7 Winners Worth 22 S&P Points in an Hour
The morning started out with a very nice series of pattern trades. The market opened and traded to a bullish countertrend resistance. This would normally setup a long trend trade, but that trade was destined to fail and the chart told you. The TICK could only reach a -22 as a high. It traded for about 4 minutes at this zone, and over 15,000 contracts were bought on market orders. Nobody was buying at the NYSE and somebody was selling every ES contract that they could. Additionally the dollar was bearish towards trades. The market traded through the intermediate support and that setup a perfect reversal trading pattern.
Reversal Pattern Trade
With the 15,000 contracts sold at 1790 providing resistance, the market trades to the intermediate resistance zone, there was a lower low tick at -696, and a lower high at -177 as the market reaches intermediate resistance. The dollar is still bearish. Now the people holding losing contracts that they bought at 1790, see this retracement as an excellent opportunity to cut losses and get out. ZoneTraderPro users see this as a perfectly setup trade that yielded a possible 3.75 points.
Exhaustion Trading Pattern
Price next trades into an exhaustion trading pattern, that has 4 ticks of adverse excursion, but only 83 contracts traded at 1785.00, meaning that if you used NinjaTrader’s Sim Stop feature, that trade would likely have not been stopped out. This trade had a divergent TICK low.
Exhaustion Trend and Trend Patterns
An Exhaustion Trend Pattern that has a higher tick high and a higher tick low, and the dollar has turned bullish. This trade was good for 2.5 points. The exit from this trade illustrates the need for ZoneTraderPro. The blue countertrend zone sat at 1788.75. The statistics say that 50% of the time thee market will not go through this zone, so if you placed your target at 1788.5 you had the proper target to exit.
Next there is a trend trade pattern with all the same setup as the previous trade. Again the market traded 1 tick short of the blue counter trend zone. If you did not exit using ZoneTraderPro charts and strategies, you just gave up 3 S&P points of profit on each of these trades. This leads to another trend trade worth an additional 3.75 points.
Market Tops with Divergent Exhaustion Trading Pattern
What follows is another 3 winning trades with the exhaustion trading pattern marking the top with a divergent TICK high. When this series of trades finishes with a trend trade that is almost 5 points, less than 1 hour after the open, there as been 7 outstanding winning trades which yielded a staggering 22 S&P points, with two losing patterns totaling 2.5 S&P points. This all occurred in the 1st hour.