Macro micro trader

As expected, markets continued to trade upwards in a healthy bounce so far this week. Although most of my trades didn’t go as planned, but that’s how we grow and we learn.

Learning number 1) When you trade based on daily/weekly charts, your stops have to be wider. On that ES trade shared on Twitter, the marets rallied more than 130 points from the entry, but the stop was trigerred. Our stop was a meager 20 points whereas ES dipped about 25 points from the entry and up she went. It is important to have stops, but when you’re aware of the trade set-up and you see it playing out based on daily and weekly candles, the stop can be little more wider along with a capacity to add more (althogh I don’t always believe in DCA – Dollar Cost Averaging).

Learning number 2) Take profits wherever you have them. On that YM futures trade, I was up more than 200 points from the entry and could have easilt raised my stop to at least 100 points above cost, but I chose to keep it at cost and markets humbled me by trigerring my stop at cost. I also had an opportunity to book out early but I got greedy and waited for higher levels.

What next? Here’s what I expect for the key futures going forward:

ES (Daily): After successfully crossing past 20 and 50 SMAs, and just above the key daily supply zone, I expect ES to crawl back a littke before heading higher. Probably a little around 3900 before heading back up. ES has also successfully broken out of a falling wedge and sustained it for 2 days. I would expect it to do a backtest, mots likely in the next move down. I won’t enter the argument of calling it a new bull run or bear market rally. Let market decide that on its own and lets focus on how to make money on a daily basis.

On the weekly charts, the rally still is not out of steam and likely to take us towards at least a weekly supply zone of 4140 if not more. That is also a zone of 20 weeks SMA currently at 4116. But as a practice, I would go with one step at a time. Lets see if and how we do backest of the wedge breakout and then we can look into the weekly supply crossover (if at all).

YM (Daily): The daily chart of Dow Futures shows similar tendencies of the ES, MAs crossed past and looking at the daily and weekly supply overhead around 32400-33200. Expect backtest of 50 SMA and then rally towards the supply zones.

NQ Daily: Sustained breakout of the falling wedge and the backtest, along with MAs crossed and daily supply zone clesared too. All way too smoothly. Although it also appears to be forming a bear flag on the daily (green lines). I would expect the upper trenline of the bear flag provide good enough resistance util the weekly supply zone comes into play at 12950.

RTY (Daily): Interestingly, RTY has been the only index that hasn’t yet broken out of the falling wedge on the daily and sitting on the cusp of it. Also in sight is the daily supply zone around 1840. Expect some clawback before rallying upto 1900 – another daily supply zone.