TSLA Daily Bullish Gartley

This has to be quick. I might say more later. Simply, Tesla is forming a Bullish Gartley pattern while also forming a Bullish Engulfing candlestick pattern. Assuming the D point of 666.14 doesn't change, here are the targets:

.5AD=723.47

.618AD=736.99

.786AD=756.25

1.618XA=898.07

We're going for the 736.99 target. We got a TSLA May 7th 720/725 Call spread for $2.00, and a TSLA May 7th 730/735 Call spread for $1.68.

This seems like a high risk trade because the overall market looks like it's on its way down. But the Gartley pattern is perfect except for 1 thing. The D point needs to be 664.78 or lower to satisfy the AB=CD rule. So we're short by 666.14 - 664.78 = 1.36. Close enough in my book, but it makes me suspicious price might come back down to satisfy AB=CD. Although I don't think that will be the case.

Picked the May 7th expiration because the target should be easily made in a week, and the high Theta will assist to widen out the spread quickly.

Risk: 2.00 + 1.68 = 3.68 * 100 shares = $368

Reward: (5.00 - 2.00) + (5.00 - 1.68) = 6.32 * 100 shares = $632

R:R 632/368 = 1.7:1 not bad.

It's almost 2 hours to the Close, so things could change. But I suspect the Gartley will still be valid at the Close.

CRWD Bullish Daily Chart - Exit

 Truth is, I got spooked. Market is and has been very overbought for a long time. Feels like any little excuse could cause a significant pull back. 

Astro traders are talking about the "Pink Super Moon" and Mercury at perihelion yesterday and today. These events can be seen on historical charts having a track record of causing significant reversals. I've seen the charts but don't have copies to post here. The data is easily available if you want to Google it.

We're about to go into the month of May, when many traders may adhere to the "Sell in May and go away" mantra.

The ES, YM, NQ, and RTY equity index futures are all going sideways on the Daily charts, with volume waning over the past few trading days.

Lots of Quarterly Earnings coming out this week, including some of the biggest market influencers.

Federal Reserve FOMC decision tomorrow 14:00pm ET. 

And specifically to CRWD, we have a Dark Cloud candlestick formation. See the bottom chart above. Yesterday's high was 225.10. Today's open was 225.48, which is above yesterday's high. And today's close was below the halfway point in yesterday's candle body. That's the definition of a Dark Cloud, which is suggestive of more downside. And this was formed with high Stochastics. However, normally one should not exit from a candle formation until you have a close below the 8ema. So I know I got out early. But, like I said, I got spooked, given all the other things going on.

Given all the above factors, and that there was still a little profit to capture, I took a preemptive measure and sold not only this position, but several others as well. If it becomes evident in the near future this was an unjustified exit, we can get back in.

Summary:

CRWD May 220/230 Call Spread

Entry:  $4.39 4/22/21

Exit: $4.75 4/27/21

Net: +$36.00

CRWD Bullish Daily Chart - Update 1

All of the original Bullish indications I listed in the previous post in this thread are still intact. And today's candle was just a low volume doji, but it still had a higher high and a higher low than yesterday's candle.

So the decision whether to hold the position over the weekend was a no-brainer.

Options Max Pain

Some traders believe in "Options Max Pain". This is where deep pocketed options market makers, the ones who sell most of the options, will spend millions to buy or sell stocks on expiration Friday, and maybe during the few days leading up to expiration Friday, such that they will make the most profits by having the majority of options expire worthless. If they sold the options, and the options expire worthless, then the market makers keep all the premium they collected on those expired options.

I don't know if this is true, but I certainly have seen where my projections for price based on technical analysis seem to hold off on monthly option expiration day, then go towards my target the following Monday.

Here's an example using Draftkings (DKNG) on Interactive Brokers Traders Workstation platform today 4/23/21. The top image is a 1 minute chart. The bottom image is the option chain today at 3:45pm ET, 15 minutes before the market close.

Notice the bulk of the Call Open Interest, circled in red on the left, is above 55, and you could make an argument that a high percentage is from 57 and higher. Notice circled on the right most of the Put Open Interest is from 58 on down.

Now take a look at the chart. Notice how price oscillates around 58 all day and closes at 58.12. Hmmm, isn't that right between the bulk of the Put and Call contracts? Wouldn't that make the most money for the options writers? And the corollary would be the maximum pain for the option buyers.

Coincidence? 

CRWD Bullish Daily Chart

Found this on Tradingview.com stock screener (>500k volume/day, >$20/share, Sorted by ATR).

Here are the Bullish indications I see:

• Double Bottom off 61.8% Fibonacci retracement
• Trendline Breakout
• 50sma Breakout and Retest
• Close above all Moving Averages
• Bullish Harami Candlestick pattern
• Gap up
• Scoop pattern

So, I got a Crowdstrike May 220/230 Call Spread for $4.39. Of course, this is $10 wide spread, so the potential profit is $10 - 4.39 = $5.61 * 100 shares = $561. This is better than a 1:1 Risk:Reward.

Soon as the order was filled I entered a Limit Sell order for $9.95. No reason to wait. I always enter my Take Profit order and Stop orders immediately. Why not? Sometimes I don't enter a Stop order when I have a fixed maximum possible loss when using options.

My price target based on this very Bullish setup is to reach at least the 27.2% Fibonacci extension at 287.32 and potentially the 61.8% extension at 333.31. Even the lower target is well above the 230 top of the Call spread. I expect there to some trade management going forward to take advantage of a strong upward move, but anything can happen, so let's ease into it and see if the potential converts to paper gains.

May Corn Bullish Report Reenter - Exit

Target hit, and then some. 

Summary:

YC Mini Contract

Entered  602 3/8

Exit 619

619 - 602 3/8 = 16.625 * $10/pt = $166.25

If I used the full ZC contract, as I've done in the past, the result would be:

619 - 602 3/8 = 16.625 * $50/pt = $831.25

The most important thing is not the size of the trade, its the technique. Once you have a methodology pegged down and you exercise the discipline to stick to it, its relatively easy to scale up. The hard part is converging on a good methodology. Then the harder part is getting your psychology under control. The final part is scaling up. 

Scaling up is not technically difficult, but the added fear from a bigger potential loss tugs at you to raise your Stops too close and exit too early.

May Corn Bullish Report Reenter - Update 2

Our Buy Stop of 602, as introduced in the previous post, was hit today. We were filled at 602 3/8.

We had a nice Bullish move and closed near the high, which is also Bullish. We raised our Stop from 575 to 592, which is just under today's low at 592 3/4. If we go below today's low before hitting the 61.8% Fib Extension, after the move we had today, which was not excessive, then something's wrong.

Holding the Target at 619. The candle we need to hit our target tomorrow, from today's close, is shorter than today's candle. So, we are in a good position for this trade to hit its target, Trading Gods willing.

May Corn Bullish Report Reenter - Update 1

Top chart was saved 7:02am ET this morning. You can see price was right at the D point (top) of the yellow AB=CD. The fact we weren't higher from overnight trading and Stochastics were very overbought, and we often get a reversal from overnight trading, it seemed very possible we'd reverse back down from this level. We also could rocket up further at the 9:30am ET open of the cash session, which of course would be great for our trade.

To address this binary situation, we moved our Stop up from 565 to break even at 589. If we continue upward then the tighter Stop shouldn't matter. If we start dropping then we'll be protected from losses.

I sent the following Tweet this morning at 7:03am ET:

"Moved our Stop up to 589 break even 7:00am ET this morning on our Long  May Corn Futures trade. Stochastics are high and we're hitting the yellow AB=CD level."

The bottom chart was saved just after the corn futures market close. You can see we ended lower. Our break even Stop was hit 9:36am ET.

You can see the BB/KC Breakout is still looking good. That doesn't mean price can't continue downward. Also, we never dropped below the 3ema. So this is still a Bullish looking setup. But we have no actual indication we'll continue upward.

How would you handle this situation? I decided to wait and see. Especially considering tomorrow is a Friday. Friday's are often a little slow in the markets, and a weekend means you cannot manage your position if news comes out.

After the market closed, I entered a conditional order to go long if price exceeds today's high. If this is filled tomorrow, the objective is to quickly run up to the 61.8% Fib Target. If the order is filled but doesn't hit the Target or the Stop, then I'll figure out how to manage it tomorrow.

Here's the contingent order, that might be filled overnight or tomorrow morning:

Buy Stop 602 (today's high was 601 1/2)

Stop Loss 575

Target 619

Russell 2000 Possible Short - Exit

Big reversal day in the Russell 2000. It ended the day session up 1.11%. In doing so it hit our 2254 Stop. Doesn't mean our original analysis was wrong. Its just very hard to short an equity index when the Federal Reserve and the US Treasury can't increase the money supply fast enough or large enough. They seem to be insatiable. 

So, I guess the lesson could be to wait until all the equity indexes are in a Bear Market rather than a Bull Market before you short them.

Bottom line:

Entry 2205.60 4/13/21

Exit 2254.10 4/14/21

2205.60 - 2254.10 = -48.5 * $5 = -$242.50

May Corn Bullish Report Reenter

Since our exit from our long corn position (see previous thread), May corn has these Bullish indications:

• Bullish Engulfing Candlestick Pattern
• Bounced off 8ema
• Bollinger Bands/Keltner Channel Break Out
• Above all Moving Averages
• Higher Highs/Higher Lows
• Stochastics not yet overbought

What sealed the deal for me was the BB/KC Breakout. See the bottom chart in the red highlighted area where you can see the BB's blossoming outward past the Keltner Channel.

At 8:04am ET I Tweeted out:

"Back in on our Long  May Corn trade from 588 3/4. Stop 565, Target 619. Details later."

This post contains the details. The Stop and the Target are the same as in the earlier trade. Here we go again.

Russell 2000 Possible Short - Update 1

Price drifted down enough today to trigger our Sell Stop at 2206. The low was 2201.50. Our order was filled at 2205.60 at 10:11am ET.

Unfortunately, but not unusually, price drifted back up and left us in the red. However, we're still pretty far from our Stop at 2254, and if you look at the zoomed in chart you'll see we closed right on the 8ema. The tiny candle you might see after the close is the beginning of the 4pm-8pm candle.

Today's candle and the 2 previous candles form a bullish candlestick pattern called a Morning Star, which is not constructive for our short position. However, Stochastics are not in the oversold range, so the Morning Star is somewhat impotent.

Worse than the Morning Star is that we bounced off a support area. Looking left you'll see this area has been both support and resistance. We temporarily breached it and we were looking good. In fact, until we reversed back up above today's entry, we were forming a Bearish Doji Sandwich candlestick pattern, which was very promising for our short position.

We may be in a little trouble here, but we have to give this trade some room. We have several possible sources of resistance which could send the price back down. In order of distance, least first:

• 2 downward Trend Lines (thin, white, angled lines.
• 20 sma
• 34 ema
• 50 sma
• Bollinger Band
• 200sma

There are also Fibonacci retracements between today's low (2201.50) and the previous swing high (2253.30) that may serve as resistance levels.

So, it was an obvious decision to hold the position at the market close.

Russell 2000 Possible Short

The chart above is a 4 hour chart, saved on 4/12/21 at 1:30pm ET. It's a busy chart so try to look at just the aspect that is being discussed.

First notice the big, thick, white, diagonal lines. These form a possible AB/CD pattern. The D point for an AB=CD 1:1 ratio can be calculated by 2306.40 - (2366.00 - 2092.70) = 2033.10 (I'm aware the trailing 0's after the decimal are superfluous. They're included for clarity when looking for those numbers on the chart). 

Notice the D point coincides with the 161.8% Fibonacci Extension of both the yellow range (2045.30) and the purple range (2042.80). These levels are also on the way down to the 27.2% Fib Extension of the green range (2018.26).

So far, we've identified a good 1st target area. We'll set the target to just above the highest point of resistance we've found, at 2046.

At the current time, price is just drifting sideways. This sideways movement has created a BB/KC Squeeze. Notice the Bollinger Bands are inside the Keltner Channel. This is not a confident place to enter a short trade. We want some kind of confirmation we're going to break to the downside rather than the upside. So, we'll enter when price has made a new swing low. The most recent swing low has been at 2206.70. We'll enter a Sell Stop order at 2206.

If our short is triggered, and we reach our target, then we'll have breached the large Head & Shoulders pattern. The pattern is indicated with a thick, white, vertical line, and the thick, white, slightly angled Neckline at the armpits. If we breach the Neckline, then we'll copy and move the vertical line such that the top of the line is on the Neckline at the break out point. This is the traditional measured move for a Head & Shoulders pattern. You can easily see the measured move will have an expected target for the H&S breakout far below our 1st target. 

So, if we hit our 1st target, then we'll wait for price to bounce back up and retest the H&S Neckline, and start back down. When we see that, it would be a good time to re-enter this short position with a lower target. But we have a long way to go before we need to worry about that trade.

Summary:

4/12/21 4 Hr (M2K $5/pt)

Entry: Sell Stop 2206

Stop: 2254

Target: 2046

Risk: 2206-2254=48*$5=$240

Reward: 2206-2046=160*$5=$800

R:R=3.3:1

May Corn Bullish Report - Exit

These 2 Crop reports were due out 12:00 ET today:

• Crop Production.
• World Agricultural Supply and Demand Estimates.

By 10:15am ET this morning I figured the corn market was going to just drift sideways until the reports came out (see the 15 minute chart at the top). Unless you hire Mr. Beeks from "Trading Places"

you can't know the response to the reports. Since we made a new higher swing low at 549 3/4 on 4/6/21, we raised our Stop from the original 531 to just under the new swing low. See the middle chart above. So, at 10:18am ET I sent the following Tweet:

"Moved Stop up to 549 on our Long May Corn Futures trade.  Just below recent swing low of 549 3/4. Crop reports  due out 12:00 ET today."

You can see on the above 15 minute chart at the top that price slowly crept upward until the reports came out. Then we see the classic "Stops Sweep", where price pops up then drops. See the top and bottom charts above. This messes up a lot of newer traders by triggering a buy then taking out their Stop. But we were prepared, as per our Tweet yesterday, and posted on yesterday's blog post:

"Split the position into 2 targets. The original 619 and added 593 at the 27.2% Fib Ext. If 593 is hit, moving Stop to breakeven."

So the initial response to the reports hit our 1st target and I moved up our Stop as planned. The Limit order was filled at 593. See the top chart above. Then sent out the following Tweet at 12:02pm ET:

"1st target hit! Moved Stop up to 578 break even on remaining position in our Long May Corn Futures trade."

Then at 14:14 ET our breakeven Stop was hit and filled at 577 5/8. 

So, bottom line:

1st position:

Entered 565 4/1/21

Sold 593 4/9/21

Profit 593 - 565 = 28 * $10/pt = $280

2nd position:

Entered 577 7/8 4/1/21

Sold 577 5/8 4/9/21

Profit 577 5/8 - 577 7/8 = -1/4 * $10/pt = -$2.50

Net 280 - 2.50 = +$277.50

Of course, looking back with 20/20 hindsight, I wish we used the full contracts. But nice to get a win and be safely out before the weekend.

JPY/USD Jun Futures Bullish Aspirations - Exit

Well, that was a great plan, but the Yen didn't get the memo. Price just tanked all night. The other 2 entries were triggered and filled, and then the Stop was triggered and filled. 

Unfortunately, every trading setup has less than a 100% success rate. Fortunately, we used the mini-contract.

Loss:

9158 - 9129 = 29 pips * $1.25 = -$36.25

9150 - 9129 = 21 * $1.25 = -$26.25

9142 - 9129 = 13 * $1.25 = -$16.25

Total $78.75

JPY/USD Jun Futures Bullish Aspirations

By "MTI" I'm referring to a trading method that says given a pull back from 38.2% - 78.6% then you can expect a reversal and continuation of the trend to a 161.8% Fibonacci Extension. Notice the green range pulled back to between 38.2% - 50% then reversed and hit its 161.8% target.  Then the yellow range did the same exact thing. So based on those successes, we entered a trade to continue the upward trend and hit 161.8% target for the purple range.

When we entered the trade we didn't know where the pull back would end. We only knew we already hit the 50% retracement level at .009156. We could wait for price to break through the top of the purple range and see how far the pull back reached before reversing. This would decrease the potential profit substantially, and increase the loss risk substantially because the Stop should go under the low of the purple range. So, instead, we decided to scale in at the likely reversal levels. Since we're scaling in, we used the MJY mini-contract ($1.25/pip) rather than the full JPY contract ($12.50/pip).

The likely reversal levels are the 50% (9156), 61.8% (9150), and 78.6% (9142) Fibonacci retracements. Since we had already bounced off the 50% level we entered with a market order which was filled at .009158. Then we entered 2 contingent limit orders at .009150 and .009142.

Our target is the 161.8% Fib Extension at .009210, but as usual we shaded it by 1 pip. So the actual target is 9209 (abbreviating ".009209" as "9209").

The Stop is 1 pip below the purple range, which is the basis of this whole trade. That would be .009130.

The minimum risk is if only the 1st contract was filled. The maximum risk is if all 3 contracts are filled. The same is true for the reward. We'll skip the case of 2 contracts being filled since its between the other two cases.

RiskMin=9156-9130=26 pips

RiskMax=(9156-9130)+(9150-9130)+(9142-9130)=58

RewardMin=9209-9156=53

RewardMax=(9209-9156)+(9209-9150)+(9209-9142)=179

1 contract R:R = 53/26 = 2:1

3 contract R:R = 179/58 = 3:1

Very happy with these Reward:Risk ratios.

May Corn Bullish Report - Update 3

Nice day for Corn! We got a beautiful big green candle and it closed near the top. This is very Bullish and shows follow through for the Morning Star pattern we formed yesterday. It looks like we are forming a J-hook pattern which should lead to an AB/CD pattern. The anticipated minimum D point for the AB/CD is at the top of the second thick, yellow, diagonal line, which can be calculated from C(549 3/4) + [B(585) - A(533 3/4)] = 601.

The previous, bigger AB/CD (see the thick, white, diagonal lines) has a D point of 600 3/4, as shown on the chart.

The original target was 619 which is based on the 161.8% Fib Extension, as shown on the chart. This is a reasonable target, especially given how far from overbought the Stochastics are, as shown on the bottom of the chart.

However, the previous D point (600.75) and the new D point (601) coincide, and are just a little higher than the 127.2% Fib Extension, which is 593. This could be resistance, or may even be all we get. Plus tomorrow is a Friday, and we can hit 593 with a smaller candle than today. So, given those facts, at 10:12am ET this morning I included this in a Tweet:

"Split the position into 2 targets. The original 619 and added 593 at the 27.2% Fib Ext. If 593 is hit, moving Stop to breakeven."

May Corn Bullish Report - Update 2

We ended the day with a constructive looking chart. We formed a Morning Star Candlestick pattern. However, its not as meaningful with Stochastics in the mid-range. But we may have formed the beginning of a J-hook pattern that continues the AB/CD pattern (see the thick, white, angled, diagonal lines).

We closed above the 8ema, and all the MA's for that matter. We also closed above the consolidation area I've been talking about, which supports the original thesis from the first post in this thread "The simple thesis is we're going to bounce off the consolidation and make a substantial move upward."

We're still under water relative to the average entry price, which is (577 7/8 + 565)/2 = 571. Today's close was 561 1/2. The target is 619. So, we still have a long way to go, but we seem to be more on track than any other day in this trade.

So, of course we're holding the position. Since the AB/CD projection is 600.75 and the 1.272 Fib extension is 593, we may adjust down the target when we get close to that range.

May Corn Bullish Report - Update 1

We've penetrated into the consolidation area, but we didn't close below the 8ema. The previous 2 candles before today do not form a candlestick sell pattern. We need to give this trade time to bounce off the consolidation area.

So, the decision was to hold the position, even though the chart looks a little weak.

May Corn Bullish Report

There's a lot on this chart. You can ignore most of it. This trade is based on just 3 things.

1. There was a sideways consolidation back to Feb. The top is approximately 558.
2. There was a very bullish "Grain Stocks" report that came out 3/31/21. B/O consolidation.
3. Next day (today) we gapped up at the open, rose a little further, then
• Filled in the gap
• Tested the top of the consolidation
• Closed above the consolidation and all Moving Averages

The simple thesis is we're going to bounce off the consolidation and make a substantial move upward.

We entered near the Open at 8:25 ET, when it appeared price was going to continue upward. Entry price was 577 7/8. 

Anticipating a gap fill, we entered a Limit order at 565 near the bottom of the gap, which was filled at 11:23 ET. Since we wanted to place the Stop below the recent swing low, and wanted to use at least 2 entries, so we used the YC mini-contract ($10/pt) rather than the full sized ZC contract ($50/pt).

We're targeting the 61.8% Fibonacci Extension at 620. Stochastics are still mid-range, so there's plenty of runway.

Notice the Bollinger Bands have been inside the Keltner Channel for many weeks. The longer the consolidation, the bigger the Break Out. Louise Yamada says "The longer the base, the higher in space".

Summary:

Entry: 577 7/8 and 565.

Stop: 531

Target: 619