Thursday, November 13, 2008

11-13 Crappy Market, Good Attitude

Everything is bad I hear. Everyone is losing their rear in the market and this is a tough market environment. I agree that the environment is tough. Traders the world over are standing on the side lines, many of them because they have lost mega bucks over the last several months. Of course we have to be careful in this market. Normal trade ranges are out the window and the liquidity is very thin. Patterns seem to be non existant and trends are relentless. However, if you are patient and attentive with the presence of a positive attitude, out of the blue a trade can set up. A trade going with the sentiment, the flow and one that can pay very well. I am posting two such examples that are soley based on price action and support/resistance areas. I did not trade these set ups, but saw them very clearly after the fact ( what good is that?). My point is, some set ups are there but a trader must expect the unexpected to catch them. The psychology also comes into play when trading these setups, I think much more so than normal conditions. After relentlessly trending, there is an unexpected rally and you might think to yourself, "this thing is finally turning around" and we watch a nice set up, going with the sentiment and flows just come and go because the fear of entering this environment against such an aggressive move against the flow. I do not blame anyone for not trading in an environment they are uncomfortable with. This market is very difficult to discern most times and I am lost to what is going on. But, when I recognize a very good level of support, especially a recent level and then a break, I should be preparing for a retest of that area for it could offer a good trade. I must be within my risk parameters and even scale back more because of the very low liquidity in this market.



The first example is on the USD/CHF pair. On the daily chart, we had a clear close above fractal resistance and then the very next day a retest. Looking on the 15 minute chart, a clearer entry can be seen. On the AUD/USD pair, a clear break and hold below support and a retest late in the session. This can happen when you least expect it but can offer a bounce or even a resuming of the trend. I do agree that this market environment can kill accounts, but keeping a positive mindset and waiting on just the right thing can offer some money making opportunities.