|
PureBytes Links
Trading Reference Links
|
THE T-BOND DAY TRADING REPORT
Spotting Opportunity in the Treasury Bond Futures Market
Report for Wednesday, March 17, released 6:30AM CT
-----------------------------------------------------------
Support, Resistance, and System Signals
USM9
R3 123 10/32
R2 122 31/32
R1 122 19/32
DP 122 4/32
S1 121 24/32
S2 121 9/32
S3 120 29/32
MONITOR FOR HOLY GRAIL SETUPS! If the 5/15/30/60 or 120 min ADX>30
then look to trade the bounce against that period's 20EMA with the
last intraday swing pivot extreme as the target.
Watch for OOPS! Trade - If O < YL then buy YL on a stop.
-----------------------------------------------------------
Commentary
I've included a chart of yesterday's activity to show you how nicely
these things set up sometimes, especially when you incorporate the
proper tools to help you interpret the market's behavior. It also
helps demonstrate the point that this stuff is NOT rocket science! The
indicators used on this chart are very easy ones to set up. There is
absolutely no reason to feel intimidated by them. They can be a BIG
help in your day trading.
The first attached chart for today (usm_5min.gif) depicts yesterday's
trading activity with a few very simple indicators overlaid. The thin
red line running through price is the 5 min. 20EMA. The thin blue line
represents the 20EMA of the 15 min. period, the next period higher
(overlaying the 20EMAs of different periods on the same chart enables
you to quickly see where price is relative to these levels without
flipping back and forth between charts). Below the price chart is the
3EMA-10EMA. This indicator can often tell you a great deal about the
market's true intent, ESPECIALLY when new pivot extremes are being
made. If you're not yet using it, I highly recommend you add it to
your arsenal.
We started off yesterday's trading above the DP and soon began
drifting lower. As price moved towards the 121-20 DP level we could
notice that the 15 min. 20EMA was moving up to join it. We have two
separate influences of support acting in unison. That's a good sign!
And to top it off, our 3EMA-10EMA oscillator on 5 min. charts is
forming classic divergence: price registering a lower level on the
move to 121-20 while the oscillator is registering a higher reading
than it did on the prior pivot. When we add in the two bar reversal
pattern at the pivot point, we have a multitude of factors coming
together to make a very good case for getting long, and a fill
somewhere around 121-24 would have been appropriate, probably a little
better if you entered on the indicators alone without waiting for the
price reversal pattern. An appropriate stop might have been two ticks
under the pivot extreme, or 121-18.
>From here, the first level of potential resistance was the prior day's
high of 121-30. There just didn't seem to be anything holding it back
as it went through that level, so the next to consider is R1 at
122-05. There was a quick fake-out on the way up, but if you paid
attention to the 5 min. 20 EMA, it would have kept you in the action.
The reversal pattern occurring at R1 might have had you exiting. But
the triangle that eventually formed at that level was enough for you
to expect an upside breakout, with an eventual run to 122-14, just 1
tick shy of R2 at 122-15.
If you take a closer look at the 20EMA on that 5 min. during this
period chart (thin red line), you can see how well it contained price
action all the way from the 121-24 level to the pivot at 122-14. I
highly recommend you run these 20EMAs on your charts. They can
oftentimes tell you a great deal about the shorter term trend of price
action.
For today's trading, there are no System Signals fired. On the 200
min. chart (2nd attached), we're still way overextended on both the
Double Stoch and the 7 period %K. The 5 period Double Stoch (thin red
line) has started to turn over, but the 10 period (thick blue line) is
still holding up pretty strong. According to Walter Bressert, the
originator of this indicator, the dominant cycle for daytrading bonds
is the 20 period on 200 minute bars. So far, we are into the 26th
period of this cycle. I'd say we're overextended!
The third attached chart for today is again the daily with Connor's
volatility indicators displayed. Historic volatility has been dropping
lower and lower. We could have some very strong moves happening very
soon. Be prepared!
As a follow-up to the Trin indicator mentioned yesterday: Both the 5
and 10 day average Trins closed under .80 today. Again, Linda Raschke
considers this to be very overbought. I make no inference as to what
it might mean for bonds, but it might be of interest to equities
traders out there.
I will be entering the day again with no particular bias, but the
combination of cycle overextension and extremely low levels of
volatility have us set up for some strong activity!
For today's report releases, we have only the Fed Beige Book at 1:00PM
CT. In overnight trading, we have a high of 122-12 and a low of 122-04
(as of 6:30AM CT).
One of the things that I really enjoy about trading the bonds as short
term as I do, is that it becomes a constant process of setting oneself
up for the big moves when they do occur. More often than not, the big
moves are preceded by little ones in the same direction. Sometimes, I
miss them, but not very often. Catching the big move is where the REAL
payoff for all the hard work comes!
This market is setting itself up for a pop. Be ready, but don't assume
anything.
And as always, discipline, patience, and flexibility are vital.
Bob Hunt
Attachment Converted: "c:\eudora\attach\USM_5MIN.gif"
Attachment Converted: "c:\eudora\attach\USM90316.gif"
Attachment Converted: "c:\eudora\attach\USMHISVL2.gif"
|