March corn futures looks like its completed its pull back. However, we still have a way to go before we break out to new highs. So, we've entered (at 427 1/2) earlier than what is prudent. It wouldn't be unusual, in my experience, to roll over and go down further to the 38.2%, 50% or 61.8% Fib. On the other hand, we've reduced the loss if we hit the Stop Loss from our early entry.
We're placing the Stop Loss just under the swing low at 412. The target is at the 27.2% Fib extension on the green range at 468 1/2. We faded the actual 27.2% extension by a 1/4 point to allow for Bid/Ask spread and/or slippage.
On my IB chart, we are at all time new highs for this contract. That's bullish in that there are no resistance levels from previous price action.
Another concern for this trade, besides entering before a break out of the previous swing high, is that we'll need to breach the possible resistance from the uptrend line.
Here are the bullish indications I see that encouraged me to enter this trade:
- Slow Round Curve
- Bounce off the 34ema
- Bounce off previous Support/Resistance
- Closed above 8ema
- Above all Moving Averages
- Retraced to just 23.6% Fib
- Stochastics are mid-range, providing ample runway
- General Uptrend
- Possible Bollinger Bands/Keltner Channel Squeeze Breakout
Decided to use the YC mini-contract rather than the full size ZC contract because we're entering early. The trade parameters are:
Entry: 427 1/2
Stop: 412
Target: 468 1/2
Risk: 427 1/2 - 412 = 15.5 * $10/pt = $155
Reward: 468 1/2 - 427 1/2 = 41 * $10/pt = $410
R:R = 2.65 which is good.
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