Dec Wheat Descending

This is a very busy chart. The trick is to focus on just the indications you're interested in and filter out the rest. Then do it again for the next indicator. This is also a bearish chart, although we entered without confirmation of the next candle continuing downward. So we did enter a little early. But look at the multiple indications of a more downside:

Let's start with the Negative Stochastics Divergence. Notice the 2 orange angled line segments. One connects the tops of the 2 most recent swing highs. Notice that line is angled upward. The other line is in the Stochastics window on the bottom of the chart. It connects the tops  of the 2 most recent swing highs for Stochastics. Notice that line is angled downward. That is a Negative Stochastics Divergence. It portends a short term down trend.

Today's candle and the candle before it form a Bearish Engulfing candle pattern. That is a bearish indication. In addition, the 2 candles before those 2 also form a Bearish Engulfing candle pattern. That adds to the bearishness.

We closed today below the 8ema. That is a bearish indication. However, we should confirm this with the next candle continuing lower than today's low. I expect that will be the case tomorrow. Until then we are early. Entering early adds risk that the trade will go against us and fail. We entered early on purpose, knowing the risk, because we could get a big candle, like 2 days ago, or gap down, and hit our target before we get a chance to enter. Also, I could be unavailable tomorrow morning and miss the opportunity to enter. To help mitigate the added risk we used the mini contract ($10/point) instead of the full contract ($50/point). We can scale in with more contracts after we get confirmation, if there's enough room left between the new entry and the target.

The 20sma often provides a headwind. So closing below the 20sma is a good sign.

We bounced off the 27.2% Fibonacci Extension on the green range 2 days ago. The green range is shown by a large green vertical down arrow around July 21st.

We also bounced off the Inverted Head & Shoulders Neckline (thick light blue line). 

If you look at the most recent swing high at 578 1/4, which is also the top of the blue Fib range, and look left you'll notice this price range was rejected on approximately 3/31/20 and 2/21/20. So twice before this price level provided resistance, and it happened again today. This is a bearish indication.

So, given all these bearish indications, it seemed like a good trade would be to enter short today rather than to wait for confirmation, as explained above. Here's the trade plan:

Use Dec YW mini contract ($10/pt).

Entered 548 1/4.

Target 61.8% Retracement of the blue range at 528. Actual target is 528 1/2 for slippage.

Stop 578 1/2 (just over the recent swing high 578 1/4).

Risk: 548 1/4 - 578 1/2 = -30.25 * $10/pt = $302.50

Reward: 548 1/4 - 528 1/2 = 19.75 * $10/pt = $197.50

Well, that R:R stinks. I believe this is high probability trade, so I'm going to tolerate the bad R:R. We already used the mini sized contract which cuts our loss potential by 80% compared to the full contract, but is there something else we can do?

Sure, we can tighten our stop to break even when we get to the 50% Fib retracement, which is very close to the 50sma, both of which can provide significant support, and might be all the downward price action we get on this trade.