Fly United to Gartleyville - Exit

Technically, since we closed above the 8ema and the 3ema, and Stochastics are not overbought, we should remain in this trade. 

However, I looked back at previous gaps (see the yellow arrows on the Daily chart above) and every one was filled in. Given that, and we have a big gap right below us 2 days ago, plus a red body today, caught between the trend lines, headline risk tomorrow from the Federal Reserve Chairman speaking at Jackson Hole, bad things happening in Afghanistan, and tomorrow being a Friday, this is beginning to smell like a high risk trade at the moment.

It seems best to let things settle a bit, or react strongly, until early next week. So, sold the UAL Sep 50 Call for $0.80. Sent a Tweet out at 15:49 ET announcing our exit.

We'll keep an eye on UAL and get back in on the Gartley when the timing is better.

Summary:

Enter $101

Exit $80

Loss $21

Dec Wheat Looks Short - Exit

Relative to the bobble we're in, which is at the same level as the previous congestion, it's not really time to exit. A better decision is to wait for confirmation with more upward price action.

However, given that Stochastics are oversold, we closed over the 8ema, and an Ag report is coming out at 15:00 ET today, I think the best decision is to exit and capture the profits we have left, which is about half of the maximum profits we've had during this trade, which was yesterday.

I sent a Tweet at 14:15 ET announcing our exit in case anyone needed to know, which gives 5 minutes until the full contract market close at 14:20 and 30 minutes for the mini-size contract market close at 14:45. I was trading the min-size YW contract.

Bottom line:

Entry: 748

Exit: 738 1/2

Profit: $95.00

Not the $650 profit as planned (see https://jmstweets.blogspot.com/2021/08/dec-wheat-looks-short.html) but at least its a win.

Fly United to Gartleyville - Update 14

We closed above one of the 2 Trend Lines but not the other. We made a higher high and a higher low. Stochastics are still mid-range. Looks like we might be forming a Double Bottom. All in all, you have to say we're on a Bullish track. 

The next hurdle is closing above the other Trend Line, then above the 50sma, and the final obvious possible source of resistance is the 200sma. Between the 50sma and 200sma, there's a previous swing high at 49.60. That's another possible source of resistance.

It looks like it might be very difficult to get to any of the Gartley pattern targets, but this pattern has a high success rate. So, we're in the fight and we'll keep holding until there's a good reason to exit.

Dec Wheat Looks Short - Update 6

Not a lot to add regarding today's price action, but did want to point out on the Daily chart above, that we made a lower high and a lower low, and we did so on higher than usual volume. We also had a very small upper wick. These are Bearish.

Unfortunately, Stochastics are oversold for a second day, and we closed closer to the top of the candle than the bottom. We also could not close below the 34ema. These things are not Bearish.

We continue to bobble between the 34ema and the 8ema. No good reason to exit the trade as of today.

As I mentioned in Update 4, the Stop was moved to break even. This will be our coping mechanism with the Ag report due out tomorrow at 15:00 ET named "Outlook for U.S. Agricultural Trade". This report references Wheat and Soybeans, among other things, and could possibly effect our trade. 

Unfortunately, 15:00 is after the Wheat market closes at 14:20, and won't re-open until 20:00. Since this is  not a major report, our Stop at 748, which is (748 - 726 3/4) 21 1/4 points higher, is assumed to be high enough to protect us after the re-open.

Fly United to Gartleyville - Update 13

Well, we're back in UAL to the long side. Today we gapped up at the open and didn't even try to fill it. The candlestick pattern is a "Doji Gap Up", which is very Bullish. We just continued higher and closed above the 8ema, and above the 20sma. We also had an ADX bullish cross.

Unfortunately, we're up against two different Trend Lines. This could provide some resistance, and could actually drive us back down to fill the gap.

We're still in the Gartley pattern on the Daily chart, and the D point has not been violated. This trade is still valid. So, got a UAL Sep 50 Call for $1.01. Same strike price as last time.

If we clear the current resistance, then we have to deal with the 200sma and 50sma at about 49.50.

The Target is still .618AD (the 61.8% Fibonacci retracement of the range between A=63.70 and D=42.56) at 55.62.

Dec Wheat Looks Short - Update 5

Sticking with the glue analogy mentioned in previous posts. Only thing new today is that Stochastics became oversold for the first time during this trade. 

So, we moved the Target up to the 50% Fibonacci retracement at 702 1/2 instead of the 61.8% Fib retracement.

The previous congestion at this price area lasted 7 days. We've been in it 3 days. So, if we have time symmetry, then we can expect about 4 more days of this chop. If that's what happens I may not post again until something newsworthy happens.

Dec Wheat Looks Short - Update 4

Above is a zoomed in Daily chart just after the 20:00 ET Wheat market open last night. I sent the following Tweet with that chart at 20:23 ET:

"Our Dec Wheat Futures short position opened tonight with a small gap down, which is nice. But I don't like how its starting to creep up like ivy on a wall. 

So just in case, moved our Stop to break even at 748. The previous trading day high was 747 3/4, which is over the 8ema. If the Stop is taken out, then we're probably making at least a 50% retracement up this down leg to about (786 1/2+723 1/2)/2=755."

The price level from which we bounced (approximately 722-726) is a very logical level to provide support and/or resistance. The reason is, its where there was a swing high on 7/20/21 and a swing low from 8/5/21 - 8/10/21. Its also the 38.2% Fibonacci retracement of the yellow range.

Here's today's action at the Close on a Daily chart:

You can see we did continue climbing up, to a high of  745. Just 3 points shy of our 748 Stop. I'm glad it retreated back down and didn't close over the 8ema, or even the 3ema. The chart still looks bearish, and Corn and Soybeans look even more bearish. I don't want to be out of this trade yet.

However, we're certainly not out of the woods. We could climb even higher tomorrow and close over the 8ema, which would suggest an exit.

In the previous post I said:

"If it [the previous congestion at this price level] acts like glue, then we'll trade sideways for days, and then, if we're lucky, we'll break down further, as we expect."

At the moment, this seems like the most likely prognosis. So we'll have to grit our teeth and hold the position for now.

 

Fly United to Gartleyville - Update 12

Well, our UAL Aug 50 Call expired today. We bought it for $1.97 on 7/26/21. The chart looks weak, with a break below the triangle and a BB/KC breakout to the downside.

However, the Gartley pattern X point hasn't been violated, so its still a valid pattern. In fact, we haven't even violated the D point. So, I might trade this again to the long side, if we get a reversal.

On 7/26/21 this looked like a very Bullish chart. I don't regret going long. You have to accept not all trades will work. Again, this trade hasn't actually failed yet. It's just taking longer to reach a conclusion than I expected.

Bottom line, the loss is $197.

Dec Wheat Looks Short - Update 3

We had a very constructive day for our short wheat position. Like the past 4 trading days, we made a lower high and lower low today. We closed under the 8ema and also under the 20sma. We closed near the bottom of the candle. We've had another good volume day relative to the entire past of the December contract. Stochastics are still in the mid-range. All this is encouraging for our trade.

The challenge now is the congestion we are in from 8/3/21 - 8/11/21. Also, immediately under this range is a swing high from 7/20/21. These conditions can act as support or glue going forward. If it acts as strong support then we'll bounce off this level, which is not desirable. If it acts like glue, then we'll trade sideways for days, and then, if we're lucky, we'll break down further, as we expect. Of course, we could cut right through this level like a hot knife through butter, or even gap down on Sunday night, and continue downward. We can't know which of these will be the case, so we have to hold onto our position and react to what we see next week.

I thought about taking a hedge for the weekend, but we're looking strong and have a 20 point cushion. If we gap down, or continue down quickly Sunday night, then a hedge would only hurt us. Plus we're using the mini-contract. So, I passed on taking a hedge.

Dec Wheat Looks Short - Update 2

Both of the above charts are Daily charts. The top chart is zoomed in more than the bottom chart. I included the wider chart because I noticed something I hadn't in the previous posts. Going further back to about April 1st, I added the thick, angled,  purple line segments. These highlight a bigger AB/CD pattern that tops out at the same level as the shorter term yellow AB/CD. This is another Bearish indication because AB/CD's often reverse after completing.

Just like the previous 3 days, we made a lower low and a lower high. We didn't form an upper wick today. That is to say, the Open price was the same as the High for the day. And we closed below the 8ema. Stochastics are still in the mid-range and accelerating downward. Also, notice how high the volume was today. That tells you there was a significant battle between the Bulls and the Bears, and the Bears won, at least today. All these things are Bearish and strengthens our short thesis.

However, we closed above the mid-point of today's candle, we bounced off the 20sma, and if you look left you'll see we're coming into a previous consolidation area. These are not Bearish.

The expectation is to either drop down through the current level quickly, or to bobble between the 8ema and the 20sma for a few days or so.

If we're fortunate enough to break through the 20sma, we still need to break through the 34ema, 50% Fib, and the 50sma to hit our target, in that order.

We have a very Bearish chart and there was no doubt that we needed to hold our position. By the way, Dec Corn and Nov Soybeans took a nice dump today, which supports our short trade.

It's extremely doubtful we'll hit our target tomorrow because the target is so far away. So, we'll have to decide whether to hold over the weekend and whether to take a hedge for protection.

CRWD Looking Bearish - Exit

At 12:05 ET today I Tweeted:

"Added Stop Loss order to sell at break even in case the FOMC Minutes at 14:00 ET drive our CRWD  position up."

At 15:12 ET I Tweeted:

"Exited our CRWD 240/235 Put spread. Details later."

Top chart is the Daily, bottom chart is the 3 minute. We were getting a slow creep upward soon after the open, then an acceleration upward in response the FOMC Minutes Release. Price got up into the 240/235 spread range. That eats into our profits if it doesn't drop back down under the 235 level. If we close over 238.67 (5-1.33 not counting commissions and slippage) at expiration , there will be no profits.

Since our Aug 20th 240/235 Put spread expires day after tomorrow, we have very little time to recover from a brief retest of the 8ema, which would be normal. 

Stochastics are now slightly oversold and we're clearly losing momentum on this down leg. I don't think we've gotten our full benefit from the BB/KC yet, but on this trade we may have.

Given all this, it seemed like the best idea would be to capture and lock in our profits while we can. So, I sold it at 15:11 ET for 2.87.

Summary:

Entry: 1.33

Exit: 2.87

Profit: 287 - 133 = $154. 154/133 is a 16% return in 8/18/21 - 8/13/21 = 5 days. Annualized, that's (365/5)*16=1,168%. Gotta call it a win.

Dec Wheat Looks Short - Update 1

On the Daily chart above you can see we continued further downward but prices reversed and closed slightly higher than the open, forming a Doji candle. A Doji represents indecision. 

Considering we closed under the 8ema and Stochastics are heading down, and all the original bearish indications described on the previous post, we held our bearish position.

Also, Nov Soybeans closed down for the day, forming a lower high and lower low compared to yesterday, and Dec Corn formed a tiny Doji right at yesterday's close.

Although Wheat's price action did not do a good job of confirming the Bearish indications, the decision to stay short was clear enough.

CRWD Looking Bearish - Update 2

I'm both satisfied and disappointed at the same time. I'm pleased we made a lower low and a lower high than yesterday but would have liked a bigger candle and a close near the bottom of the candle. 

However, we did maintain our volume, Stochastics didn't become oversold, and the Bollinger bands are continuing to widen. So everything is going our way today.

We closed at 232.66, so our 240/235 Put Spread is completely in the money. If we can stay below 235, our spread will be worth the full $5 width at expiration on Friday. 

But if we reach the higher target of 220 with Stochastics oversold and little time left to expiration, I might want to exit at the 220 target rather than waiting for the 210 target and risk an up day that could eat into our profits.

Dec Wheat Looks Short

I'll admit right up front I entered this trade too early. Should have waited for a continuation downward, or even better would be a lower close. But this looks so good I couldn't resist.

What I see:

• AB/CD completion and reversal.
• Evening star candlestick pattern.
• Close below 8ema.
• High Stochastics.
• High volume.

For targets, I like the 50% and 61.8% retracements of the yellow range. Starting out with the 61.8% Fibonacci as the target at 682 1/2. But the actual target will shade it a bit to 683 to account for Bid/Ask spread and slippage.

Placing the Stop just above the 786 1/2 swing high.

Using the YW mini contract ($10/pt) rather than the ZW full contract ($50/pt) to control risk since I'm entering too early.

If it looks like a good idea, I might add another contract this week with the 50% Fibonacci as the target.

Summary:

Entry: 748 on 8/17/21 at 14:17 ET.

Stop: 787

Target: 683

Risk: 748 - 787 = -39 * $10/pt = $390.

Reward: 748 - 683 = 65 * $10/pt = $650.

R:R = 650/390 = 1.7:1 not great but acceptable.

CRWD Looking Bearish - Update 1

Beautiful bearish day. Our Put spread is 240/235, so the maximum value would be 240 - 235 = 5. So in addition to the conditional order to sell the spread when the stock hits 210, I added a limit order of 4.95 for the spread.

If we get a similar size move tomorrow and the next day, then we'll only need 2 more days to hit our target.

CRWD Looking Bearish

Sent a Tweet out 12:06pm ET today that I was shorting CRWD by buying a 8/20/21 240/235 Put Option Spread for about 1.50:

"Shorting CRWD for swing trade. See notes on chart. Details later."

Here's what I noticed today:

• Head & Shoulders with symmetrical timing
• Bearish Engulfing candlestick pattern
• Close below 8ema
• Close below 50sma
• Lower low 2 days ago than the previous swing low
• Bollinger Bands / Keltner Channel breakout
• Blue Ice Failure
• Stochastics mid-range, providing runway to the downside

The chart above is a Daily chart. Some of these observations are obvious and some are not. Let's discuss what needs more explanation. If you have any questions on the rest, please add a comment to this post with your question.

Before we do though, I want to point out I'm a technical trader, not a fundamental trader. So, even if the company is doing well and has a bright future (I have no idea), it doesn't matter to me taking a short term trade. The charts of even the best companies have occasional pull backs. This chart is telling me this stock is about to have one.

The neckline of the Head & Shoulders pattern is very slanted. A horizontal neckline would be ideal. But I've seen plenty of slanted necklines still turn into winning trades. The two thick horizontal line segments at the top show the distance between the head and the tops of the shoulders. Having the same distance from the head to the left shoulder and the head to the right shoulder would be ideal. We have exactly 9 candles to the top of  left shoulder and 9 candles to the top of the right shoulder. Can't get more symmetrical than that. We actually broke through the neckline 2 days ago but I just noticed this chart today.

You can see the Bollinger Bands / Keltner Channel breakout by noticing the light blue squiggly lines have crossed the darker blue squiggly lines from the inside to the outside. This is a strong indicator that whatever the current trend is at the breakout will continue for 5 -7 candles on average. The BB/KC is not 100% accurate, like every other indicator, but I have had good luck with it. Bollinger Band's are a function of Standard Deviation. The Keltner Channel is a function of Average True Range.

"Blue Ice Failure" is a pattern I learned from Steven Bigalow of candlestickforum.com. It means that price breaks through the 50sma, then reverses and tried to cross back over the 50sma but fails to do so, and continues downward. Its too early to tell if we have that pattern, but we certainly do have the beginning of it.

The first target, for me, on a Head & Shoulders pattern is half the projected measured move. But we already hit that the day of the breakout. So, I'm going to name the second target as the "first target", which is the full length of the Head & Shoulders pattern projected measured move. This is about 200.

The next target is the 200sma, which is the thick, white, diagonal, squiggly line. Read my profile to get a link to a description of all my indicators. This is estimated to be about 210, but its impossible to know exactly where the 200sma will be when price gets down to it.

Today at 11:52am ET I bought a 8/20/21 240/235 Put Option Spread for 1.33. If this trade goes as planned, then this spread will be worth 5.00 at expiration this coming Friday.

Summary:

Entry: $133

Target: CRWD = 210

Stop: None needed with an affordable option.

Risk: $133

Reward: $500 - 133 = $367, not including commission.

R:R = 367/133 = 1:2.76, which is very good.

Fly United to Gartleyville - Update 11

By the close today we were below the 8ema and back inside the triangle consolidation. This could be considered a failure of the breakout or just a deeper check back before continuing higher.

If there was more value in our position I would have closed it out and watched for a possible reversal. But, unfortunately, we only have $0.12 of value left in the option. That being the case, I think the better decision is to hold the position and see if we get a bounce back up next week.

I think we're fully baked on this trade, but it doesn't make sense to sell now, with so little value, and it expires next Friday on the 20th. We'll have to ride it out.

If it keeps going against us, I may not post anymore updates until expiration.

Fly United to Gartleyville - Update 10

We're at a very, very important point in this price action. It's very common for a break out to go back and retest the break out level. That's what we did today on the Daily chart. 

We closed right on the trend line as well as the 8ema and 20sma. Now its all about where we go from here. If we close substantially lower, like under the lower trend line for example, then its more likely we'll continue down, in my opinion. If we close above today's high then its more likely we'll continue the current upward trend. Of course, its quite possible we'll have a quiet Friday and close near today's close, in which case we'll have to wait until next week to see where we're going. 

There's only one economic report due out tomorrow that might move the market, but its not a big one. Its the University of Michigan Preliminary Consumer Sentiment at 10:00am ET.

If we close above yesterday's high, which is the high of this uptrend so far, that would be a very bullish indication. We're still coming out of Gartley D point, which helps with the odds to the upside, but we have bearish factors too:

• The D point is below the 78.6% Fibonacci retracement.
• We formed a Bearish Harami candlestick pattern today.
• We're below the 50sma.
• We're below the 200sma.
• We're in a larger down trend.
• We're in the 3 worst performing months of the year for equities (Aug - Oct).

The good news is our risk is limited to cost of the options. Cold comfort, but it'll be greatly appreciated if UAL takes a nosedive overnight or over the upcoming weekend.

Fly United to Gartleyville - Update 9

Not much to say here. We breached the upper trend line and closed above it. Also closed above the 8ema. Stochastics are still mid-range, so we have plenty of runway.

Today was very constructive to our bullish position, but we still have to get through the 200sma and 50sma to reach our target.

We're looking good but our $50 Call expires 8/20/21. So, I added an order to sell the position when we reach break even at $2.00 for the option.

Soybeans and Butterflies - Exit

I woke up early this morning a little after 5:00 am ET. I stumbled into my office and started watching a 5 minute chart. That's the chart on top above. There was a nice cupping pattern, which is supposed to be bullish, but it started to fail and head down, as you can see. We were relatively close to the target of 1357 and had days worth of accumulated profits. I didn't like the way the cup was failing. I've seen some very steep drops occur in the past from such a pattern. Notice it was on high volume with overbought stochastics.

Also, I was cognizant of 2 market sensitive reports coming out tomorrow 8/12/21:

• Crop Production at 12:00
• World Agricultural Production at 12:15

So I quickly sold the position and retained as much of the profits as possible. Looking at the hourly chart above, you'll see we never reached the 1357 target and we did head down pretty far. I'm very pleased with my decision. We may get a bounce and rise up to the original target, but maybe not. I'm glad to capture what I could and miss that little downdraft.

At 5:31am ET I tweeted the equivalent to:

"Closed our long position in the November Soybean Futures Butterfly pattern. Sold at 1351 1/4 at 5:24am ET. Nice profit 1351 1/4 - 1317 1/4 = 34 points. Didn't like what I saw on 5 minute chart, very close to 1357 target."

Summary of the YK Nov Soybean trade:

Entry: 1317 on 1/4 8/4/2021

Exit: 1351 1/4 on 8/11/21

Profit 34 * $10/pt = $340.

If we used the full size ZS contract it would have been 34 * $50/pt = $1,700

Fly United to Gartleyville - Update 8

Interesting candle today. We're still within the triangle consolidation on the Daily chart. However, we did poke our head out above the upper trend line, but we closed right on the trend line rather than above it. We did close above the 8ema though. Notice today's candle formed a Bullish Engulfing candlestick pattern when combined with yesterday's candle.

Importantly, we are right at the point in triangle (about 80% to the apex) where you can expect a break out. We could certainly bounce off the upper trend line and start heading downward, and thereby continue the bearish price action that led into the triangle. But, since we're in a Gartley pattern, there's a very good chance we'll break to the upside. And this is my expectation sometime this week.

Soybeans and Butterflies - Update 4

Above is the hourly chart. You can see we mostly just consolidated today. But we did end the day above the 8ema after receiving support from the 20sma, 34ema, and 50sma. 

Look at the thick white arrow pointing to the 60 minute opening candle starting 20:00 ET, which is the beginning of the overnight session. That candle opened gap down on a weak looking chart. But look what happened. Rather than continuing downward, which would be a reasonable expectation based on the previous day's price action, we closed the gap, and ran up much further. Crossed all the Moving Averages but the 200sma. Then gave up some profit taking leading into the 9:30 spot market open.

But, look at the 9:30 ET open. You can spot it by looking at the volume. The 1st large bar is the opening candle. We opened gapped up above the 8ema and spent most of the day above the Moving Average cluster.

Its reasonable we'll spend more time bobbling between the 50sma and the 200sma, but I think we're looking strong enough to eventually break through the 200sma to the upside.

Staying long for now.

Fly United to Gartleyville - Update 7

Zoomed in Daily chart above. We're in a triangle consolidation with mid-range Stochastics. Candlestick patterns in this environment aren't very helpful. What is helpful is that today's candle closed about 75% above today's low.  But, we have 4 small body candles in the last 5 trading days. Looks like a lot of indecision right here. We're below all the moving averages. Chart looks pretty weak.

We did close below the 8ema but it would be more reasonable to wait and see how we break out of this triangle. Especially since we have fixed maximum loss due to using options, and we're near max loss now.

The Gartley pattern we're trading has 65-75% success rate, where success is reaching .618AD or higher.

The chart looks discouraging but the decision is to hold. 

Soybeans and Butterflies - Update 3

Tough call today. The Sunday night trading, after the weekend, continued the bullish trend on the 1 hour chart, as shown above. Then around 3am ET the trend reversed downward until it rejected off support at the 50sma and a confluence of some Fib levels. At 9:30am we rocketed upward until we rejected off resistance at the 200sma. We drifted downward until the Close, where we closed the day below the 8ema.

If you based your decision purely on the candlesticks, you would have definitely closed the position with a profit at the Close. Not a bad decision, but we're still in a Butterfly pattern, which has a high 75% success rate, where "success" means hitting .618AD or higher. Add to that the Stochastics(14,3,3) are now oversold, the 2nd to last candle made a Hammer candle, the bodies of the last 2 candles together made a Bullish Engulfing pattern, and we have some nice padding down to our Stop at 1318.

We could easily continue downward, but I think we're just responding here to a large, green, fast candle that hit the 200sma. We just have to tolerate some respect for the 200sma, hold our break even Stop, and believe the Butterfly odds are in our favor.

The decision for today is to take the riskier stance, since we're in a "risk-free" trade, and the Butterfly odds are in our favor, and hold the position. 

We could have exited with about 1330-1317=13 points profit, but if the pattern works, we'll get 1357-1317=40 points. That's not greedy, that's having patience and seeing the bigger picture.

Fly United to Gartleyville - Update 6

The daily chart above shows we took a dip this morning but recovered and closed above the 8ema and above the 20sma. This is bullish, and closing above the 20sma could mean we've broken through the resistance its been causing, and now we can leave it behind on our journey to the target.

The next source of resistance we'll have to deal with is the 200sma. I'd expect a bit of a bobble between the 200sma and the 20sma, and finally a break through the 200sma and movement higher.

Soybeans and Butterflies - Update 2

Above is an hourly chart after the market Close. We closed above the 8ema, above the 3ema, and a BB/KC Squeeze Breakout has begun. Stochastics still not overbought. All this is bullish for our long trade.

I had an appointment this afternoon and had to leave at 13:15 ET, so I couldn't be at the computer for the market close. I sent out this Tweet at 11:42 ET:

"Can't be here for the Grains market Close today, but expect to continue holding our long position for the November Soybean Futures Butterfly pattern over the weekend, unless of course it hits our break even Stop at 1318 before today's Close."

Fortunately, things went as expected and we're still long.

P.S. "BB/KC" is Bollinger Bands/Keltner Channel. The BB's are thin, squiggly, light blue lines above and below the candles. The KC boundaries look the same but darker blue. The BB's are based on Standard Deviation, while the KC is based on ATR (Average True Range). Notice how the BB's were inside the KC, then between the last candle and the candle before it, the BB's broke out of the KC. That usually indicates there's about to be a big move.

Fly United to Gartleyville - Update 5

Looks like our patience may have paid off, but its still a little early to tell. What's encouraging for our Bullish Gartley trade is that we have a Morning Star-like candlestick pattern combined with a Kicker-like candlestick pattern. Neither pattern is a clean textbook pattern but they sure are close. Also, we closed over the 8ema and formed a higher low. These are bullish indications.

Looks like we got some resistance from the 20sma. And we still have the 200sma and then the 50sma overhead, both of which could provide substantial resistance.

But we're looking pretty good if you just look at today's price action and the fact that the Gartley pattern is still intact.

As I said on the previous post "We'll continue to hold it until the X point is violated, which would invalidate the Gartley pattern.".

Soybeans and Butterflies - Update 1

Interesting day on the hourly chart. We made a higher low with the 8/5/21 4am - 5am ET candle. Then we got a nice acceleration to the upside, forming a new swing high, followed by a retracement channel forming a Bullish Flag formation. Finally, we closed right on the 8ema at 1328 1/2.

This is bullish price action, which is encouraging. Of course, we could drop hard overnight. If you look from a higher time frame, this whole upward trend, since the D2 point, could look like a Bearish Flag formation.

Stochastics started downward during the end of day profit taking. This could be interpreted as making room for more upside, or as the beginning of the end of this uptrend.

So the best strategy seems to be holding our position but moving the Stop up to break even (1318).

Soybeans and Butterflies

Top chart is the 4 hour November Soybean Futures chart. The next chart is the 1 hour chart.

On the 4 hour chart you can see price came down and bounced off the 61.8% Fibonacci retracement level of the yellow range. You can also see, at the same time, it was bouncing off a level between the 127.2% and 161.8% Fibonacci extensions of the purple range.

Using the 1 hour chart, you can see a valid Butterfly pattern, where XA is the purple Fib range. The D1 point was an assumed D point for a Gartley, and we did get a good bounce up to 1359, but that fell short of any targets. Then price dropped back down below the X point and led to a Butterfly pattern.

Today we took a sudden drop at 10am ET, but we bottomed out above the D2 point, thus forming a higher low with a tweezer bottom. Then we found some resistance from the 34ema but we closed above the 8ema. Stochastics are not yet overbought. Also, the recovery from the 10am drop formed a Bullish Engulfing candlestick pattern.

I had entered long at 1317 1/4 yesterday using the YK mini-contract ($10/pt) but didn't feel confident enough to post it. With today's price action, I'm feeling more confident.

I don't like that we're between the 8ema and 34ema. It suggests we may bobble between them for a while. Also don't like the Bollinger Bands are inside the Keltner Channel. Although, this sets up a possible BB/KC breakout, which could be very constructive in the near future if we break out to the upside.

Summary:

Entry: 1317 1/4

Stop: 1308 (just below the D2 point)

Target: 1357 (just below the .618AD level)

Risk: 1317 1/4 - 1308 = 9.25 * $10/pt = $92.50

Reward: 1357 - 1317 1/4 = 39.75 * $10/pt = $397.50

R:R = 397.50/92.50 = 4.3:1 which is scary good.

Fly United to Gartleyville - Update 4

Above is the daily chart. You can see we filled the gap yesterday and continued down today, until we bounced off the 78.6% Fibonacci and Bollinger Band. We're still under the 8ema, which is bearish. But we're also still above the Gartley X and D points, which means the bullish Gartley pattern is still valid and working.

So, we're still holding the bullish position. We'll continue to hold it until the X point is violated, which would invalidate the Gartley pattern.

However, we are in a race against time, as the option will expire on August 20th. And its losing a little value everyday due the Theta time decay. 

Fly United to Gartleyville - Update 3

Well, this looks pretty damn sad, for a bullish trade. I would exit, if it wasn't for the fact that:

• Our risk is limited to the cost of the option, which is well within our risk tolerance for 1 trade.
• We are still in a valid Gartley pattern.
• We just filled in a gap.
• Stochastics are not overbought or oversold.
• The longer term trend on the Weekly is upward.

So, I'm going to let this continue to play out. The problem with this strategy is that the option will expire on 8/20/21. We'll need this thing to bounce soon.