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The Challenges of Trend Days

July 10, 2012

Sometimes very clear and steady trends can cause the market to move without ever providing the pullback entry opportunities that I look for. One consequence of this is that it becomes difficult to add support and resistance lines, and these tend to follow the trend too closely to be useful. Another drawback, from a psychological standpoint, is that it can be difficult to sit on the sidelines and watch a market undergo a significant move without being on board.

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Daytrading Chart 10th July

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After a long entry at a support line under the pre-market lows was stopped out, today provided too profitable short entries. In both instances a trend line had previously been broken without the CCI registering an overbought reading, so I sold against the EMA. In the first instance the signal from the CCI remained unclear even as price first tested the average, and I postponed my entry a little.

 Finally, towards the end of the session there was a neat confluence of resistance, the EMA, and an overbought CCI. I shorted here and was soon stopped out. Discretion might arguably have avoided this loss, as after a sustained downtrend day it is not uncommon for the market to rally into the close with profit-taking. Hindsight is a wonderful thing!

View Today’s Chart Analysis

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