12192018 Trade Plan — Range Bound Trading

19 Dec 12192018 Trade Plan — Range Bound Trading

12192018 Trade Plan — Range Bound Trading

Ter­mi­nol­o­gy (par­tial­ly made up by yours truly)

• PA = Price Action
• BO = Break Out
• BD = Break Down
• CAR = Con­firm As Resistance
• CAS = Con­firm As Support
• UKC = Upper Kelt­ner Channel
• LKC = Low­er Kelt­ner Channel
• TV = Tick Volume
• WPP = Week­ly Piv­ot Point
• DPP = Dai­ly Piv­ot Point
• DR = Dai­ly Resis­tance (piv­ot)
• DS = Dai­ly Sup­port (piv­ot)
• WR = Week­ly Resis­tance (piv­ot)
• WS = Week­ly Sup­port (piv­ot)
• HL = High­er Low
• HH = High­er High
• LH = Low­er High
• LL = Low­er Low
• SD = Stan­dard Deviation
• VWAP = Vol­ume Weight­ed Aver­age Price
• AS = Asian Session
• LS = Lon­don Ses­sion (EU)
• NY = New York Ses­sion (US)

Per­son­al Checklist

5 pos­i­tive 1 negative	Sat­ur­day	Sun­day	Mon­day	Tues­day	Wednes­day
12/15/2018	12/16/2018	12/17/2018	12/18/2018	12/19/2018
Beers night before	8	3	3	5	2
Hours sleep	7	7	7.5	6+1	8.5
Sleep well?	3	3	2	2	2
Mela­tonin	0	0	0	0	0
Neg­a­tive thoughts?	2	1	1	2	1
Exer­cise yester(to)day	1	1	1	1	1
Grat­i­tude	5	5	5	4	5
Joy	5	5	5	4	5
Anger	1	1	1	1	1
Fear	1	1	1	1	1
Focus	2	3	3	2	2
Cof­fees today	1 cof­fee	half a cup of coffee	1 espres­so spread over 2 hours	0	1 espres­so real quick
Inter­mit­tent fasting	no	no	yes	no	no
Water 2.2L bottles	1	1	2	2	2
Vit­a­mins	no	no	yes	yes	yes
Time bed yesterday	03:00	00:30	00:30	03:00

Health review (for the past week)

• How would you describe your over­all health?
  • My arm is hurt­ing a bit again and I have still not made a doctor’s appoint­ment. I’ll do that today. 
  • I have also not made an appoint­ment for a gen­er­al checkup. 
• How do you feel?
  • I feel good but feel not as sharp. Feel a bit grog­gy is the term I believe. Just not sharp for when you’ve slept too much. Actu­al­ly, I didn’t sleep that much but took a sleep­ing pill last night to be able to sleep so that could be it. 
• How would you rate it (1–5)?
  • 3

The Big Pic­ture (dai­ly)

• What hap­pened yesterday?
  • After a peri­od of VWAP expan­sion on the dai­ly we tight­ened last week and last Mon­day we made a move to the 2.0 SD
  • Yes­ter­day we dropped even fur­ther out­side of the 2.0SD and crossed the 47.50 lev­el and the VWAP start­ed expand­ing again
    • Which could mean that we are in for a new down trend
  • It seems that the mar­ket doesn’t agree with oil pro­duc­tion cuts made by OPEC+ and the mar­ket is still in state of a sur­plus in supply
• What is the mar­ket sentiment?
  • What does the crowd think?
    • Accord­ing to investing.com yesterday
      • All sen­ti­ments is 61% bullish
      • Last week 68% bullish
      • Last 3 days 68% bullish
      • Although sen­ti­ment has increased in bull­ish­ness I believe the bears will have their day in the sun first before the bulls can take over
    • Accord­ing to investing.com today
      • All sen­ti­ments is 60% bullish
      • Last week 63% bullish
      • Last 3 days 61% bullish
      • The sen­ti­ment shows a decrease in bull­ish­ness and com­pared to yes­ter­day we see a drop of 1 point over­all, drop 5 points on last week and 7 points in the last 3 days. That’s seems like a big shift in sen­ti­ment and the price reflects this
• EURUSD
  • Yesterday’s range
    • High 1.14016
    • Low 1.13380
  • Accord­ing to IG
    • EURUSD: Retail trad­er data shows 58.1% of traders are net-long with the ratio of traders long to short at 1.39 to 1. In fact, traders have remained net-long since Nov 23 when EURUSD trad­ed near 1.1388; price has moved 0.2% low­er since then. The num­ber of traders net-long is 4.5% high­er than yes­ter­day and 10.1% low­er from last week, while the num­ber of traders net-short is 12.7% low­er than yes­ter­day and 8.7% low­er from last week.
    • We typ­i­cal­ly take a con­trar­i­an view to crowd sen­ti­ment, and the fact traders are net-long sug­gests EURUSD prices may con­tin­ue to fall. Posi­tion­ing is more net-long than yes­ter­day but less net-long from last week. The com­bi­na­tion of cur­rent sen­ti­ment and recent changes gives us a fur­ther mixed EURUSD trad­ing bias.
    • MIXED BIAS
• Gold
  • Yesterday’s range
    • High 1250.42
    • Low 1245.24
  • Accord­ing to IG
    • Spot Gold: Retail trad­er data shows 77.7% of traders are net-long with the ratio of traders long to short at 3.49 to 1. The num­ber of traders net-long is 0.7% high­er than yes­ter­day and 5.5% high­er from last week, while the num­ber of traders net-short is 5.2% low­er than yes­ter­day and 3.1% low­er from last week.
    • We typ­i­cal­ly take a con­trar­i­an view to crowd sen­ti­ment, and the fact traders are net-long sug­gests Spot Gold prices may con­tin­ue to fall. Traders are fur­ther net-long than yes­ter­day and last week, and the com­bi­na­tion of cur­rent sen­ti­ment and recent changes gives us a stronger Spot Gold-bear­ish con­trar­i­an trad­ing bias.
    • STRONG BEARISH BIAS

Intra­day Fundamentals

• API report
  • API report shows a build of 3.450M which would be bear­ish on the mar­ket so now the mar­ket will look at the EIA report to come out and con­firm or reject this number
• EIA report
  • EIA report hasn’t come out yet. It will come out lat­er today.
• Geopol­i­tics and the head­lines of today?
  • Libyan Oil In Jeop­ardy As Peace Talks Fail
    • Libya’s NOC has shocked the oil mar­ket by offi­cial­ly declar­ing force majeure on its oper­a­tions at the El Sharara oil­field, the largest oil­field in the country
    • Months of opti­mism on a peace deal between the two com­pet­ing gov­ern­ments that would increase oil pro­duc­tion, which could mit­i­gate the falling Iran­ian and Venezue­lan pro­duc­tion seems unlike­ly to happen
    • The 315.000bpd field is blocked by pro­tes­tors and mili­tias in the area
  • North Kore­an Oil Smug­glers Elude U.S. Military
  • Sur­prise Inven­to­ry Build Sends Oil Prices Even Lower
    • The Amer­i­can Petro­le­um Insti­tute (API) report­ed a sur­prise crude oil inven­to­ry build of 3.45 mil­lion bar­rels for the week end­ing Decem­ber 14, com­pared to ana­lyst expec­ta­tions that we would see a draw in crude oil inven­to­ries of 2.475 mil­lion barrels.
  • Iran Claims It Holds The Most Oil, Gas Reserves In The World
    • Accord­ing to the CIA World Fact­book with data as at Jan­u­ary 2017, Iran ranks fourth in the terms of biggest proved crude oil reserves in the world, behind Venezuela, Sau­di Ara­bia, and Cana­da. In the nat­ur­al gas proved reserves rank­ing, Iran is sec­ond behind Rus­sia and ahead of Qatar and the Unit­ed States.
  • Off­shore Drillers Bull­ish On 2019 Despite Falling Prices
    • Upstream oper­a­tors are set to sanc­tion up to 50 new large oil and gas projects next year, up from 40 in 2018, with deep­wa­ter oil devel­op­ments in Guyana and Brazil and liq­ue­fied nat­ur­al gas (LNG) projects lead­ing the way, ener­gy con­sul­tan­cy Wood Macken­zie said this week.
  • It’s Fed day
    • The expec­ta­tion is still for the Fed­er­al Open Mar­ket Com­mit­tee to raise the fed­er­al funds rate by a quar­ter point to a range of 2.25% to 2.50%.
  • Gold Ends a Touch High­er Ahead of Fed
    • Investing.com — Every Fed­er­al Reserve meet­ing is impor­tant, but the cur­rent ses­sion will prob­a­bly be the most telling since the March meet­ing that decid­ed this year’s first rate hike. Con­se­quent­ly, gold traders hedged them­selves on Tues­day with a slight­ly high­er price move, await­ing the outcome.
• Addi­tion­al OPEC news
  • None at the moment

Intra­day Tech­ni­cal Analysis

Tues­day	Wednes­day	Thurs­day	Fri­day	Week	Mon­day	Tues­day
12/11/2018	12/12/2018	12/13/2018	12/14/208	12/10 — 12/14	12/17/2018	12/18/2018
High	52	52.827	53.242	53.146	53.455	52.145
Low	50.67	50.91	50.32	51.059	50.536	49.336
Close	51.925	51.17	52.821	51.398	51.449	49.458
Pip move	172	191.7	292.2	208.7	291.9	280.9
PP	51.662	51.636	52.128	51.868	51.813	50.313
dis­tance	99.2	72.6	180.8	80.9	127.7	97.7
R1	52.654	52.362	53.936	52.677	53.09	51.29
dis­tance	172	191.7	292.2	208.7	291.9	280.9
R2	53	53.553	55.05	53.955	54.732	53.122
dis­tance	-72.8	-119.1	-111.4	-127.8	-164.2	-183.2
S1	51	50.445	51.014	50.59	50.171	48.481
dis­tance	-172	-191.7	-292.2	-208.7	-291.9	-280.9
S2	50	49.719	49.206	49.781	48.894	47.504
TV	55,460	56,804	66,441	60,821	308,330	54,218
50MA	61.706	61.212	60.781	60.326	59.833	59.267
200MA	66.277	66.222	66.181	66.137	66.075	65.999

• What can we tell from the PP levels?
  • We can see that we had a big­ger drop of 378 ticks than we’ve had in recent times
  • Also the PP lev­els have widened so there is room for big­ger swings to happen
  • Also, as opposed to last week we can see that PP lev­els have dropped sig­nif­i­cant­ly where the Dai­ly resis­tance lev­els are at the same lev­els of the week­ly sup­port levels
• Where are the high­er time frame S/R levels?
  • We have a high­er time frame sup­port lev­el at 42.90 which we are still ways away from but it’s pos­si­ble that we might drop to that level
  • A resis­tance could be the 47.50 we just crossed yes­ter­day. It would be inter­est­ing to see if we con­firm that as resistance
• What does the 4H and 30M chart show?
  • We can see that yes­ter­day we broke the 49.80 level
• How far away are we from tech­ni­cal levels?

S/R	kind	lev­el	Dis­tance
R6	4H	49.8	284.8
R5	WS2	48.894	194.2
R4	R1	48.724	177.2
R3	Dai­ly	47.5	54.8
R2	DPP	47.422	47
R1	30M	47	4.8
CURRENT	46.952
S1	30M	46.62	-33.2
S2	30M	46.25	-70.2
S3	DS1	44.944	-200.8
S4	DS2	43.642	-331
S5	Dai­ly	42.9	-405.2
S6	Depths of hell	0	-4695.2

• What has the Asian Ses­sion printed?
  • After we dropped to the 46.20 lev­el yes­ter­day we inched high­er and dur­ing today’s AS we found resis­tance at the 47 level
  • Then we reject­ed it for a 2nd time and I took a short posi­tion that I quick­ly cov­ered at a 8 tick profit
• ATR
  • What is the ATR on the daily?
    • Is it increasing/decreasing?
      • 2.4452
        • And it’s still decreas­ing indi­cat­ing a pos­si­ble agree­ment on direc­tion of the market

Trade Plan

• I’ll be look­ing for PA to test the 46.62 lev­el and pos­si­bly break that
  • The next tar­get would be the 46.25 level
  • If we hit this lev­el I’ll be look­ing to see if a swing rever­sal is a valid set­up to take
    • If not, I’ll be look­ing for a con­tin­u­a­tion on the BD
  • If we find sup­port at the 46.62 lev­el and move back up I’ll be look­ing for a swing swing rever­sal set­up at the DPP 47.22 level
  • How­ev­er, a con­tin­u­a­tion move might be pos­si­ble as well. Although the DPP 47.22 lev­el is a fair­ly crit­i­cal resis­tance lev­el since that is also the lev­el we bounced off of yes­ter­day before we broke it. So we might see a CAR play today

My goals for the day (Dai­ly Report Card)

• Only take 4 trades (dur­ing London)
• Only take Play­Book trades

Read­ing the Tape

• What is print­ing? Look for PA with high­er TV and S/R levels.
  • Just before the Lon­don open we dropped to the 46.62 lev­el which I indi­cat­ed as a 30M S/R lev­el and for now it looks like it might hold as sup­port on the 5M
    • Although the 30M looks quite bearish
  • Spread has increased to range between 34 and 42
  • 10:00
    • Lon­don open and we’re mov­ing up in a pos­si­ble rejec­tion of the 30M 46.62 level
      • TV isn’t that much though with 245
  • We had a long-wicked can­dle at the open that looks bear­ish but I don’t have the con­fi­dence yet that we will actu­al­ly BD the 46.62 level
  • NEWS
    • Forex — U.S. Dol­lar Slips as Traders Wait for Fed’s 2019 Rate Outlook
    • Gold Prices Lit­tle Changed as Traders Await Fed Outlook
  • It looks like we might be hav­ing a KC / VWAP diver­gence set­ting up
    • If that is the case I will wait for the BO/BD and look for an entry in either a pull­back MA or KC
  • On the 30M chart we can see that we moved back into the KC while rang­ing between the 46.25 and 47 levels
  • Spread is increas­ing and is rang­ing from 34 to 51
  • 10:55
    • We dropped to the 46.62 level
  • 11:00
    • We broke it with a can­dle going low as 46.36 but has been pushed back a lot and close at 46.53
  • I’m going to wait for a con­fir­ma­tion of a rever­sal at this lev­el and go long
  • Since we moved back into the KC very quick­ly I hes­i­tat­ed to take a long posi­tion and might have missed the best R/R so will have to reassess where to get in IF I do get in still
    • I think I am show­ing good restraint in not tak­ing a posi­tion here
      • Good thing since we dropped in a 50% retrace­ment but then quick­ly shot back up again but that would have hit me emotionally
  • Spread is still 34
  • Some inter­fer­ence at 46.85 level
  • TV gone down after we spiked at the drop to 46.36 lev­el. Then it was at 705
    • We are now at a frac­tion of that
  • 11:45
    • We just spiked up an are test­ing the 47 level
    • This could pos­si­bly be a BO from UKC
    • With tar­gets at 47.50 since that is the Dai­ly resis­tance lev­el after that we have DR1 48.724
  • We didn’t break out and we start­ed rang­ing between the 47 and 46.50 level
    • Exact­ly with­in the widen­ing KCs
  • We start­ed test­ing the 46.62 and bounced back up. PA seems a bit errat­ic and this might be where the algos are kick­ing in. So I’m gonna stay out of the mar­ket. KC has widened and so has the VWAP and we don’t seem to be get­ting in overbought/oversold posi­tions for my set­up sig­nal to arise. I have not­ed that when VWAP fol­lows the KC we might hav­ing rang­ing oppor­tu­ni­ties where u sell the highs and buy the lows.
  • We returned with a swing high to the 47 level
  • The 30M chart shows a lot of inde­ci­sion at these lev­els which the 5M chart have shown as well. 

Trade Man­age­ment

Explain what trade you put on (include price, SL, TP) and what your thoughts are dur­ing the trade

• T1 (dur­ing the AS)
  • Why? What do I see?
    • Swing Rever­sal
      • I saw a dou­ble rejec­tion of the 46.95 lev­el fair­ly quick after each oth­er. And we had already reject­ed this lev­el ear­li­er in the AS
      • Also the 30M touched the upper 2.0 SD after the cross from expand­ed VWAP to tightened.
      • Entry 46.904
  • SL
    • 47.019
    • Few ticks above the high­est wick
  • TP
    • 46.674
  • Trade Man­age­ment
    • Cov­ered at 5M VWAP 1.0 SD at 46.823
    • Win 8 ticks

• T2
  • NOT TAKEN

• T3
  • NOT TAKEN

• T4
  • NOT TAKEN

Trade Review

• Did you let your trade play out or did you cov­er or stop out soon­er? If so, why?
  • I only took one trade and am hap­py with that. I cov­ered at the next crit­i­cal lev­el and didn’t let the trade play out as much as it could. 
  • I learned a good les­son today and I’m going to take that into my back­test­ing. The set­up I am going to look at is when the VWAP and KC expand togeth­er. This might be the mar­ket con­di­tions for range bound trad­ing. All in all a good day. 

Dai­ly Report Card

• Only take 4 trades (dur­ing London)
  • I only took one trade dur­ing the AS
• Only take Play­Book trades
  • Since none of my setups arose dur­ing the LS I didn’t take any trades and I am hap­py with being consistent

Feed­back?

Any ques­tions or feed­back you might have please feel free to leave a com­ment or con­tact me directly.