In last week's article we saw a buy in Crude Oil as it tested support.
Today we examine a very similar setup in the emini Russell.
In this session I was trading with the following timeframe combinations: HTF 5 min, TTF 1 min, LTF 15 sec / 2-range
As always, please note that the timeframes are not important. It's the concepts that we're looking for. If you trade higher timeframes you should simply scale upwards accordingly.
Let's start by looking at the higher timeframe structure at the time of session open. We're looking here at the HTF 5-min chart showing session data only.
The chart above shows the complete prior day's session, with the new day opening just above an area of congestion at the lows.
The 24 hour chart (not shown) also displays similar congestion in this same area just prior to session open.
An important point to recall here is the fact that support is NOT a single level. While we have marked the chart with support at the prior day's low, we should reasonably expect that support may be found anywhere within the area of congestion at the lows.
Let's examine the trading timeframe after allowing it to develop the first two price swings.
As we see above, the market rallied upon opening to test the immediate area of resistance before falling to test the area of support below. The break below the opening range and into the area of support was immediately rejected.
The new session has not yet provided sufficient price swings to clearly and definitively establish a trend.
My expectations are for this lower area of congestion to provide support, leading to another retest of higher resistance and quite possibly a ranging environment.
Any continued bearish strength will invalidate this premise and have me looking for either a breakout failure long or breakout pullback short, should price be able to break the prior day's low.
Let's move forward a few candles.
Here we see a scenario very similar to last week's Crude Oil trade – two failed attempts to push into support. And if you're a familiar reader of my articles you'll know that one concept I absolutely love is this… two failed attempts to do something will often lead to an attempt to do the opposite.
This is the buy opportunity I was looking for in the lower edges of the "potential" ranging environment.
A trade is entered, targeting the prior resistance and current session highs.
There is almost no need for trade management decisions as price moves smoothly and quickly to the exit levels.
Two failed attempts to do something will often lead to an attempt to do the opposite!
Etch that one into your brain!
It's a keeper!