Paypal may be a friend again - Exit

With friends like these who needs enemies? The Jan 220/230 Call option spread expired today. The Butterfly pattern never took flight. No pattern I know of has a 100% win rate, and I've heard the same from experts many times. So, we just have to brush it off and find the next pattern.

Summary:

Entered: Jan 220/230 Call option spread for .63 on 11/30/21.

Expired: .00 on 1/21/22

Net $-63.00 loss. This is why you don't cost average on losing positions. If I went solely with a conviction this would work out, then I might have added more long positions as the stock made new lows. Thank goodness I've learned not to do that.

March Soybeans Formed a Bearish Gartley - Update 1

Wow, that happened fast. Yesterday we had a nice Bearish Gartley pattern, today we had a strong reversal. Today's candle combined with yesterday's candle forms a "Doji Gap Up" candlestick pattern. This is a strong indication of a change in investor sentiment.

When price crossed the 8ema and continued strongly, I decided to avoid greater losses and get out. At 9:36am ET I Tweeted "Dumped the March Soybeans Futures. Details later.". I watched the chart periodically during the day, looking for a reversal but it never came. 

I think exiting was the right strategy, but there's still hope. We're still in a Gartley pattern that hasn't failed. It hasn't even invalidated the D3 point. Neither have we violated the downward Trend Line you'd get if you connected the candle tops for the past 7 days.

I see four likely scenarios from here:

1. We quickly start heading back down.
2. We briefly continue upward but reverse back downward before violating the D3 point.
3. We form a new D point and head back down before violating the X point.
4. We violate the X point and set up a Butterfly pattern.

Because I have no idea which of these will play out, or some other scenario, I don't want to reverse our position to a long trade. Since we don't have an edge, it's better to just monitor the chart until we see a high probability opportunity.

Feb Gold May Flutter South - Exit

Wow! What a gift that was :) Price went up just a little over the 127.2% Fib Extension and established the D point of the Butterfly pattern at 1833. That yielded a Target of 1805.87, so I didn't need to change yesterday's estimated initial Target of 1806.

Then we drifted down followed by a slight pull back. Then the bottom fell out and we accelerated down to the Target and then some. In fact, we even hit the secondary Target of the .786AD Fibonacci retracement at 1798.50. The low as of 15:15 ET is 1798.20.

Summary:

Entry: 1830

Exit: 1806.50

Profit 23.5 points * $10/pt (mini-contract) = $235. The full contract, at $100/pt, would have been $2,350.

Feb Gold May Flutter South

At 3:28pm ET I sent this Tweet:

"Entered limit order to short Feb Gold from 1830 due to a possible bearish Butterfly pattern. Stop 1847, initial Target 1806."

See the hourly chart above for the bearish Butterfly pattern. The D point hasn't yet established itself, but the expected level is the 127.2% Fibonacci extension, which is at 1830.44.

The limit order was filled at 1830, which I shaded a little from 1830.44 to account for slippage. I set the Stop at about 5 points over the 161.8% Fibonacci extension, which is 1847. The Target is the 61.8% Fib retracement of the AD range of the Butterfly. Until we know what the actual D point is, we can't calculate the Target. But we can use an initial guess based on today's high, which is 1831.40. Based on that, the estimated Target is:

1831.40 - .618(1831.40-1789.10) = 1805.2586 ~ 1805.30

That would give us an estimated Risk:Reward of:

Risk: Stop - Entry = 1847 - 1830 = 17

Reward: Entry - Target = 1830 - 1805.30 = 24.7

R:R = 24.7/17 = 1.5:1, which is not great but its acceptable for a proven pattern like the Butterfly.

It would be very typical if price rises higher before establishing the D point. If that happens, we'll need to adjust the Target, but not the Stop because the Stop is based on the 161.8% Fib extension of the XA range (1821.60 - 1789.10), which is independent of the D point.

Summary:

Entry: 1830

Stop: 1847

Target (with estimated D point): 1805.30

R:R 1.5:1

Paypal may be a friend again - Update 4

On today's Daily chart at the top, you can see we're still above the Butterfly D3 point, still above the 161.8% Fibonacci extensions of both the green and yellow ranges (see previous posts for a wider view of the Daily chart where you can see the ranges), formed a Doji candle which represents indecision, and closed very close to the 8ema. These are indications the current down leg has insignificant momentum.

On the Daily chart on the bottom, we zoom in to show that we closed the Gap. Now that the Gap is closed, we no longer have what I like to call "Gap Pressure", which means there's an attraction to price to reverse and fill in a gap. So now, with the gap filled, price is free to resume the uptrend.

The expectation from here is to reverse direction, go up and penetrate the 20sma (thick green curvy line). and continue up to fill the next gap, which is from 226.25 (11/8/21) - 215.97 (11/16/21). We'll probably get a temporary rejection and drop after filling that gap because in addition to the gap is the 50sma, which is currently in the gap (thick red curvy line).

After that, we can continue upward to our target of 260, which is the .618AD3 retracement.