NVDA Chips are Up - Exit

Daily 3/30/22 10:10am ET

Daily 3/30/22 16:10am ET

Around 10:10am ET this morning, on the Daily chart at the top, I saw a "Doji Gap Down" candlestick pattern on very high Stochastics, followed by continued selling. That's a very Bearish signal. That's all I needed to get out of the trade and see what happens next.

As you can see on the bottom Daily chart above, we never recovered, and closed even further down. Now we have an Evening Star candlestick pattern on high, but dropping, Stochastics. Also bearish.

However, we haven't seen the confirmation of a close below the 8ema. So, it wouldn't be crazy if we bounced back up from here. If we do, I may go long again, but for now I'm happy with my decision. I believe I made the best decision this morning.

Bottom line:

NVDA Apr 290/295 Call Spread

Entry: 1.71

Exit: 1.55

Loss: 1.55 - 1.71 = -.16 * 100 shares/contract = -$16.00 per option.

NVDA Chips are Up - Update 1

The daily chart above shows continuing progress. Today we gapped up at the Open, then filled the gap, and rose back up to close with a Doji candle.

The gap up was a Bullish indication of course, but when you first saw it, you had to be concerned whether this was an exhaustion gap due to the very high and persistent over-bought Stochastics. We won't really know until tomorrow's Close, but I think the fact we climbed back up enough to close as a Doji, and closer to the top than the bottom of the candle, is an indication there is still momentum to the upside.

An easy decision to hold the position.

NVDA Chips are Up

The Daily chart above on NVDA shows a Bullish setup:

• Double/Triple Bottom
• AB/CD pattern confirmed by price exceeding the B point, and on high volume.
• The C point is only a 25.2% retracement. That's Bullish.
• Today and yesterday form a Trend Kicker candlestick pattern.

For a Target, take a look at the following:

The vertical, thick, white line segments show a measured move of the double bottom.

The diagonal, thick, white line segments show the AB=CD measured move.

The 161.8% Fibonacci extension of the green range is approximately 308. This is between the 61.8% and 78.6% Fibs of the yellow range.

Previous swing high was 313.30.

I like a conservative Target of 308.

Near the equity market close today I got an April 14th 290/295 Call Option Spread for $1.71. A spread will greatly reduce the capital at risk, limit the maximum risk to the cost of the spread, and help mitigate the Theta time decay of the long option in the spread.

I entered 2 sell orders. One is a $4.90 limit order for the spread, since it has a maximum value of 295-290=$5.00. The other is to sell the spread with a limit order at the mid-point between the Bid and Ask if NVDA stock price hits 308.

Risk: $171

Reward: It depends how long it takes to hit the Target, but the maximum reward would be $490.

R:R = 490/171 = 1:2.9 which is great.

June AUD/USD Russian Doll Gartley Patterns - Exit

At 15:38 ET I Tweeted:

"The 2nd Target we were waiting for was .7201 on the Gartley AUDUSD trade. When I checked it I saw it reversed at .7202! So I sold it at the market at .7217. Details later."

Because I had a Stop and a Limit order working, I didn't need to check on this trade very often. When I did check, I was shocked but not surprised price had dropped to within 1 pip of our Target and then reversed up. That's so close that I needed to assume that was the swing bottom, and I better get out immediately. Unfortunately, the Ask was .7217, but it didn't matter. If we did establish the swing bottom, then the odds are price will continue upward. It doesn't make sense to hang on, hoping it might dip down.

But, of course, the trading gods love to add insult to injury, so soon as I covered the trade, price headed back down to a low of the day at .71955:

Had I not checked on the chart at all, it would have hit our 2nd Target and then some.

With regard to the yellow range Gartley pattern, the first 3 targets were hit. The 4th target is very seldom ever hit.

So, bottom line:

Target 2:

Enter .7372

Exit: .7217

.7372 - .7217 = 155 pips * $1.00/pip = $155. If we used the full sized contract, it would have been $1,550.

Target 1 profit: $68

Target 2 profit: $155

Total: $223

June AUD/USD Russian Doll Gartley Patterns - Update 1

1 Hr Chart

15 Minute Chart

You can see on the 1 hour and 15 minute charts above, in the purple, that a 3rd Gartley pattern developed over night last night. I tried trading it but after the D point, price only got up to .73425, which is less than even the .5AD level. Then it meandered downward and broke the X point.

I admit it was weird trading a Bullish pattern when the other bigger patterns were Bearish. But you can see a nice up leg when the C point formed. So it was very reasonable to anticipate we could hit the .618AD of the purple range. 

And, I have learned that when you have a methodology with a proven edge, then you must take every set up, because you never know which individual trade will fail. The Gartley has a proven win rate of about 75%. So, even though this 3rd pattern was in the opposite direction of the core trade, I had to take it.

Now for the good news. The Target for the yellow range was .7304, as described in the previous post. We hit that at exactly 15:00 ET. So the first of the 2 planned trades has completed, and we have the other one still working.

Since the 3rd pattern that developed overnight, and failed, was not a planned aspect of this trade, I'm going to leave out the P&L from that separate trade.

The profit from the 1st half of the trade is:

.7372 - .7304 = 68 pips * $1.00/pip = $68. If we used the full sized contract, it would have been $680.

June AUD/USD Russian Doll Gartley Patterns

This is going to be a crazy trade. I was setting up the Gartley pattern on the AUD/USD 60 minute chart above and when I was finished, I noticed there's another smaller Gartley pattern inside the first.

The bigger Gartley, let's call it the 1 hour (1h) Gartley, is still establishing its C point. I was going to wait for the D point before entering a trade. But the smaller Gartley, let's call it the 15 minute (15m) Gartley, is establishing its D point. 

The 1h Gartley has white comments and green Fibonacci's. The 15m Gartley has yellow comments and yellow Fibonacci's.

So, we can enter the 15m Gartley, but instead of using the usual .618AD Target, we can go for a bigger Target of the 1h Gartley D point. However, I want to be conservative and trade each pattern separately.

I got 2 AUD June futures using mini-contracts because the risk is 85 pips. If I used 2 full contracts I'd be risking $1,700.

I bought the 2 futures at .7372. The Stop for both is just over the X,A point at .7457. The first Target is the .618AD of the 15m Gartley. Using the current D value of .73775, the Target is:

.73775-.618(.73775-.72555)=0.7302104

The second Target is the 78.6% Fibonacci of the 1h Gartley XA leg, which is .71797. Also, using the current C point, the calculated D point is:

.73775-(.7455-.72555)=.7178, which is amazingly close to the .71797 Fib.

We'll shade the second Target a bit because on the way there, we'll encounter the .7200 level, which is a round number. You might point out we'll also be encountering the .7300 level, but that's nowhere close to the Target. Also, there is some possible support from a gap down and swing low from late February. This adds to desire to shade the second Target up to the .7200 level.

Now, here's more craziness. There's a speaking engagement in Australia by RBA Govenor Lowe at 17:15 ET, while the FX market is closed between 17:00 - 18:00. So, come 18:00 this evening, we may get a gap open but there's no telling in which direction. I could have waited until after 18:00 to enter, but I decided I can handle the risk.

Bottom Line:

Trade 1

Enter: .7372

Stop: .7457

Target: .7304

Risk: .7372 -. 7457 = -85 pips.

Reward: .7372 - .7304 = 68 pips.

R:R : 68/85 = 1:0.8 This looks bad but remember the Gartley pattern has a 75% Win Rate, which means you could have a R:R of 1:0.3 and still break even. Plus we have the 1h Gartley that may pull down price further than usual.

Trade 2

Enter: .7372

Stop: .7457

Target: .7201

Risk: .7372 - .7304 = 68 pips.

Reward: .7372 - .7201 = 171 pips.

R:R = 171/68 = 1:2.5 which is great.

Live Cattle Megaphone - Exit

3/4/2022 15 minute 10:52 ET

On March 4th at 10:59am ET I sent this Tweet with the 15 minute chart above:

"Sold our long April Live Cattle Futures position for a small profit. Price dropped to far at the open. Sold it on the bounce. Details later."

The ideal low point would have been the 127.2% Fibonacci extension at 136.405. But price shot right through there and came close to the 161.8% extension. Then retraced upward but bounced off the 8ema and headed back down.

This didn't look like it was honoring the megaphone pattern at all. Thus our thesis was violated and we had no reason to stay in the trade.

The original buy order described in the previous post was filled at  9:30:13 ET for 1.050. I sold it for 1.125 on the bounce at 10:52:40. So, the net was:

1.125 - 1.050 = .075 * $400/pt = +$30.00

At today's close on 3/9/2022 the Daily chart looks like this:

3/9/2022 Daily Close

That is still not right for a megaphone trade.

Live Cattle Megaphone

Above is a Daily chart of April Live Cattle futures (Symbol LE). Not much on there pertains to this trade. Just look at the purple Fibonacci range and the 2 angled, straight, thin, white, lines that form a megaphone pattern.

A pattern I learned on DayTradingRadio.com years ago is to buy when price hits a Trend Line when Stochastics are extremely oversold. But you have to allow for some heat if price initially overshoots the Trend Line before reversing. Of course, price can continue down rather than reversing, so you need to control your risk with a Stop or by other means.

You can see on the chart above a beautiful megaphone pattern. Price just gently touched it right at the end of the day. On the bottom of the chart you can see Stochastics are extremely oversold. This is where you're supposed to enter a long trade. Its scary as @#$%^! Especially when you're trading a relatively illiquid commodity with a $400 point value, and no mini-sized contracts.

Also, notice we just went through the 200sma. This could add some pressure for price to reverse.

Fortunately, Live Cattle futures has options which can be used to limit your maximum risk to the cost of the option. Unfortunately, I didn't see this setup until 5 minutes before the 14:05 ET close. There wasn't enough time to get a Call option and enter long.

So, I want to enter tomorrow morning when the market opens at 9:30am ET, but not if price gaps down too far. How far is too far? I figure the 127.2% Fibonacci of the purple range is a reasonable support level. If it goes much beyond that, it's probably heading down to the 161.8% Fib or lower.

If this trade works, my expectation is for price to reverse and go back up to the top of the megaphone, or close to it.

Here's the order I entered after the Live Cattle market closed:

I entered a Buy Limit order to buy an April 142 Call with a limit of 1.3 points (1.3 pts * $400/pt = $520). The last option sold today was 1.2 points. Notice the Open Interest for the 142 Call. Its the largest of the Strikes being displayed. This suggests good liquidity when we buy or sell. It also suggests a lot of interest at that Strike price. I like both of those.

To avoid a large gap down open tomorrow that's too large, I added a condition that the futures price is greater than or equal to 135. I also made it a Day trade rather than a Good-Til-Cancel trade since tomorrow is a Friday and we're in the middle of historical geopolitical events. I may not want to enter this trade by Monday morning.

Hogs Turned Tail - Exit

Around 9:50am ET I was looking at the Daily chart at the top above and the 1 hour chart underneath. In yesterday's post I said: 

"If we form a green candle tomorrow, across from red candle from the previous day (Fri), then that would create a Morning Star candlestick pattern, which is Bullish.".

Well, that's exactly what I saw happening. In addition, you can see a Doji Gap Up candlestick pattern on the hourly chart. This is another Bullish pattern.

I needed to decide whether to get out here and minimize the loss, assuming price continued upward, or wait until the end of the day and see if we get a reversal. At 9:54am I decided the Doji Gap Up was a good reason to exit immediately, which I did.

Right after, I sent this Tweet:

"Sold the April Lean Hogs Futures Apr Put at 3.9, details later."

Turns out it was a good decision. Here's the Daily chart after the 14:05 ET Close:

Notice how we closed over the 8ema. Had I waited until the Close to make a decision, I would have exited there, for a bigger loss.

Summary:

In: 4.425

Out: 3.900

Net: 3.9000 - 4.425 = -0.525 * $400/pt = -$-210.00