YM Bullish Fractals 2-13-2017 Update

Came within 2 points of my sell limit yesterday at the 127.2% Fib level, exceeded it for a substantial time overnight, then hit it again at 9:33am this morning. Because the daily stochastics are so very overbought I sold the whole position. Under other circumstances I would have sold a third, then raised my stop to break even and set a target for another third at the half measured move target and the final third at at the 161.8% Fibonacci level.

At the moment I'm glad to hit any target and be out with a profit. The fact that my first target was exceeded for a substantial time overnight then the market opened below it had me very concerned we'd just tank and not come back until after my options lose considerable value or even expire.

By the way, because my target could have been hit near the open I disabled my conditional market order to sell when YM Mar futures hit 20,498 due to the wider bid/ask spread at the open. Instead I sold the position manually by walking down limit orders from just below the ask until it was filled.

So chalk up another winner for the good guys.

YM Bullish Fractals 2-13-2017

YM March futures daily chart above shows an AB/CD pattern. You can easily see the break out from the congestion 1/24/17 - 1/25/17. That was followed by a retest of the congestion area 1/30/17 - 2/2/17. Then we resumed the CD leg to the upside.

So how far will it go? Nobody knows of course, but I'd like to identify 4 possible targets:

1. The first target is the 127.2% Fibonacci extension level (red line) at 20500. This is 27.2% further than the AB leg. You can see the start of the Fib range at 0.0% and the end at 100.0% (green lines). This would be the most conservative target.
2. The next target is the half way point of the measured move. See the short horizontal white line at 20682. I've noticed this area often provides resistance.
3. The third target is the 161.8% Fib extention level (thin white line) at 21250.
4. The last target I have for this move is the full measured move, which is at the end of the thick white vertical line at about 21750. I apologize if that is off your screen.

Now what's really interesting is what I saw when I was trading the YM Mar futures 1 minute chart this morning, right after I studied the daily chart and got some DIA March 203/207 Call spreads for $1.70 each. Check out this chart of the 1 minute:

It's a fractal! Not exact but watch this. You have an AB/CD pattern resulting in the same 4 targets but in a different order. That is:

1. The half measured move at 20333.
2. The 127.2% Fibonacci extension level at 20347.
3. The full measured move at 20357.
4. The 1.161.8% Fib extension.

On this trade, unlike the Daily setup, the congestion from B to C took the form of an ascending triangle rather than a simple channel as on the Daily.

Notice how price rose from point C and hit resistance at the half measured move level. That level was tested 2 times before it broke through on the 3rd attempt. After that price continued to meander up on low volume to the second target, the 127.2% Fib extension. I copied the chart before knowing if the other 2 targets are hit. You can check that on your 1 minute chart later. 

This struck me as a real life, real time example of the fractal nature of the markets. The trade worked on the 1 minute. If there's no big news to ruin the pattern on the daily chart, I'd expect at least the first target at 20500 to be hit. It will be fun to see what happens from here.