Market Overview

Funded Trader Trade of the Week

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Funded Trader Trade of the Week

Our Trade of the Week is a gold trade and was chosen for its technical significance. The market had moved higher in a short term trend during the hours before the U.S. open. Recognizing a temporary balance in the market, our trader took the opportunity to take a short position near the high of this temporary balance. The market then failed to hold above the two previous highs in the balance, signifying possible rejection of higher prices, at least temporarily. Now short at $1394.90, price action very quickly verified his trade. His target of $1390.00, placed near the low of this balance, was filled within six minutes for a nice profit of $490.00. Recognizing these areas of short term balance is a great way for very short term traders to find good trade location - but they must be careful to have reasonable profit expectations.

 

John Hoagland’s Scouting Tip of the Week

The areas of balance as discussed in this Trade of the Week are valuable and important information in all time frames. The auction process rotates prices within an area of balance until the perception of value changes and either buyers or sellers become more aggressive, moving the price away from the previous "fair price area" in search of new business. If the new prices bring in more buyers (if the market is moving higher) or vice-versa, the move will continue until the market attracts business in the other direction. Typically, the market will begin to find a new area of balance. On any time frame, the extremes of these balances will be crucial areas to take trades, for either failure (a return to balance) or a breakout in search of a new area of balance. Monitoring volume at these extremes is the key to looking for continuation or failure. Rarely will trending markets change direction instantly without some kind of news or an event.

Even the very short term trader should be monitoring for changes in longer time frames as well as the time frame they trade in. The areas of previous rejection or acceptance of price are critical to finding the best trade locations and to stay away from the riskier situations that offer little reward.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets Trading Ideas

 

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