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Group,
Last week was a ID/NR7 (inside week/narrowest range of the last seven
weeks) in the March S&P futures contract. Obviously, the market has
been consolidating in a trading range. The daily ADX is down to 11.
Many large moves start from such a consolidated position. Question is,
how do we trade this pattern?
Well, there are many ways to trade breakouts: one could simply buy
(sell) if the price takes out the weekly high (low);
one could buy (sell) if the price takes out the previous week's high
(low);
one could buy (sell) a breakout from a percentage of the recent range;
one could buy (sell) a breakout from Friday's close or today's open;
OR one could buy (sell) a breakout of the trading range;...The
possibilities are endless.
It is just as important to know what NOT to do. LBR has pointed out
that swing trading does not work in low volatility enviroments. I can
vouch for that---my 3/10/16 oscillator is useless right now because
there are no oscillations to measure. I did not talk about what
direction I thought it was going to go, because I do not see a bias one
way or the other, but I hope to be prepared either way it goes.
Thoughts/observations?
Bill Bancroft
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