Thursday, March 28, 2013

NQ Trade / Week of March 24 to Mar 30

The NQ futures contact (NASDAQ), unlike the ES, is not trading anywhere near all time highs. The index is lagging the overall market, but is nonetheless in a slight uptrend, if not moving sideways.

The NQ has also had some great swings with demand zones being bought. We are looking to buy a quality, well defined demand zone and trade out one of the swings.

The NQ was rattled by the violet downward move in the EURO this week. The US markets are however, being bought on the dips by institutions, as clearly shown by the higher lows and higher highs. There have been a couple of good trade setups this week to close out the month.

The second trade setup was capitalized on.  Once again, the prerequisite setup has been this DROP-BASE-RALLY. On the 60 min chart it look more like a pivot point, but the drop-base-drop fractal pattern clearly shows up in the smaller timeframe (15 min).

We want to buy a retest of this zones.  This trade came up on the morning of Wednesday, March 27 2013.

Trade #1 - Buy NQ

Grade the Trade #1 - 2/2

In either case, both trades would have worked out in our favour, even though we only took the second one, which ironically was harder to identify on the chart.

We got long the NQ at 2781 and sold the rally into the first supply zone about 9 NQ points away.  Again with multiple contracts, we could have traded all the way to the origin of this move and in fact still be in trade.

The entry could have been slightly better as price retraced quite deeply into the zone.

What was more important was identifying the strong DROP-BASE-RALLY setup and planning a low risk entry trade around this structure. This was a FRESH zone with a STRONG move away.

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