Friday, March 22, 2013

6B Trade / Week of Mar 17 to Mar 23

Another high quality long opportunity. This time the British Pound future contract 6B (or its smaller derivative M6B) appears to be bottoming, reversing, and hitting a daily demand area representing an opportunity low on the curve. The daily chart has a strong impulse move upward, breaking the downward trend. During the time of spotting this trade, the the 6B market is moving sideways (consolidation).

We want to be on board if/when the price retraces (as you see it did on the chart) in quality demand zones.

Trade #1 - Long contract 6B or M6B

Grade The Trade (+2)

Digging down into different timeframes, a fresh demand zone formed on the 15min period. Strong entry, short time in the zone, with explosive follow through. A classic DROP - BASE - RALLY.

Retest of this zone provides a low risk opportunity, with at least 3:1 reward to risk.

The larger daily time frame is bullish. The larger daily time frame is implying a RALLY- BASE -RALLY pattern. We want to trade on the potential last rally. The smaller 15 min timeframe will be our entry point.

Overall, this was an excellent setup. Price traded into previously defined zone and reached the upper end of our target on the 15 min chart. With multiple contracts, one could continue to trade the anticipated extended bullish run indicated by the daily chart.

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