DIA: The “Idealized” Intraday Trades Of The Day

The market was supposed to go down today, wasn’t it?!  I sure felt that way but price - after all - is king.  Let’s step inside March 17 ‘09 to see the “Idealized” Intraday Trades of the day (Tuesday).

I even included a money shamrock to spice up the chart today.

The bias was - for me at least - to the downside (off confluence Fibonacci resistance from yesterday and a shooting star daily candle).  In fact, I know of more than a few people who are surprised (and upset) with today’s action.  But we do the best we can.

Price initially ran up to test the falling 20 EMA before inflecting back down (failing to make new lows) and then ran up to test the falling 50 EMA, though it only formed a bear-flag (in hindsight).  Both of these were ‘idealized trades,’ though both (likely) wound up with a stop-loss as price reversed.

One thing I hinted at in this morning’s post, but didn’t come out and say, was the potential for a “Three Push” Reversal pattern to form - and that’s exactly what happened.  That’s why I write these end-of-day summaries - the more you see these actual patterns, the better you’ll be in real-time… whether you believe their signal or not (I was a little too biased to the short-side, while I saw the Three-Push, I chose to ignore it… at my peril).

Anyway, price broke up out of the declining (narrow) trendline at noon and then the EMAs crossed and converged to set-up my favorite trade - the Cradle Trade.  It was at this point the bulls had officially taken over the day and the squeezed the shorts (bears) into the close.

I even tried to read a Head and Shoulders Reversal pattern after lunch - it formed quite well… but it too failed as the bulls charged forward into the close.  The “Oops” on the chart reflects the actual and confirmed sell-signal… which was overruled by bullish action and a bullish break above all EMAs.

Afterwards, two more retracements formed to the rising 20 EMA, signaling good entries to those of us who weren’t blinded by our bearishness.

In the end, price is king, patterns help quantify risk and opportunity… and I think the Leprechauns had something to do with today’s bullishness!

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