CL Trading day December 12 2017

posted in: Market Recap 0

Today’s Context :

  1. Day up trend. ( previous low – 57.38 )
  2. 4-Week balance ( 59.05 – 55.75 )
  3. Monthly up trend. ( POC 57.35 )

Inventories

  1. Overnight Long ( POC 58.38)
  2. Short term traders Long ( 57.83 )

Open characteristics :

  1. Gap Up
  2. Conviction : High ( bearish )

Gap rule was in play at the open.

The conviction was high on the short side as we opened and traded down immediately. When that happens I try to get in at the halfback for the day as we didn’t get any chance to enter short right off the bat.

Because the conviction was high on the short side and most overnight inventory was above us, the gap fill level was not a target. A strong move should be expected.

Once the tone is set the odds favor greatly going with the flow and trying to anticipate a reversal is the most costly mistake we can make as trader.

Everything was pointing toward a strong market starting with the open conviction and the overnight inventory conditions.
As we moved down we left a big Selling Tail at the top of the day adding to the conviction to stay short.
One time framing down lasted until “I” period and the trend was never challenged for the whole day.

The lesson today was to never fade a trend day.
I am pretty sure that a lot of traders lost money today fighting the day down trend. I used to do that in my old days.
Everything was bullish before the open this morning as we were trending up on the Month and Day time frame but the early high bearish conviction forced overnight inventory to cover. This started a big down move forcing yesterday’s long to cover their position around the 57.83 level and last Friday’s long around the 57.33 level.

Good Trading !