The Price has Entered Zone 4 – Comments by Jose 4/26/2023

The current market situation indicates that the price has entered zone 4 of the four-hour high-pressure swingarm. Given the upcoming vote on the debt ceiling and a few other news items, it’s possible that the price may remain stagnant until tomorrow morning. Currently, the one-minute swingarms are still indicating bearish trends, and there are no signs of a rebound yet. However, there is a possibility of a slingshot effect that could occur either tomorrow or at a later time.

30 Minutes is at extreme support and the 1 hour is also recognizing the support. We all know we are at support. We just need clarity to go long. For larger traders, this is an entry already and stops are in the range of 15 points or so.

Remember this?
Keep in mind that you have all of the charts and levels in front of you just as I do. Does this mean the price goes to the 2hr zones overnight? Of course not. There will be plenty of opportunity to consider a long entry sometime tomorrow.

2hr zones overnight. price has entered zone 4
price has entered zone 4

Today’s plan involves the 4-hour timeframe to create a buying opportunity in lower timeframes and aiming for the 2-hour zones. One way to identify an entry point is through a 15-minute backtest of a buy bucket. Another approach is to backtest the 1-minute zones from recently established swingarms, which may result in rapid price movements.

As traders, it’s crucial to be decisive and responsive to price action as the setups materialize. Waiting for a confirmation of a bounce could be too late, and chasing becomes the only option. Currently, we have fresh buckets that are undergoing backtesting.

price action as the setups materialize

SAMPLE – Scaling into a position. Trading Small.

SAMPLE - Scaling into a position. Trading Small.

As a trader, it’s crucial to understand that the future is unpredictable, and anything can happen. The key is to analyze traders’ reactions to past areas of interest and follow their lead. The swingarm technique excels in this regard, accurately identifying zones where prior buyers and sellers were active. By patiently waiting for swingarms to set up their slingshots (buy or sell buckets) and entering at these zones, we can manage stops, and profits, and ride the trend. It’s a much more positive experience to manage profits than losses, which is often the case for retail traders.

Currently, the price is testing yesterday’s support level which prompted a 25+ point response from buyers. We can expect a similar response during today’s US session, but we can’t predict with certainty whether there will be an early rally or not. As traders, our job is to take advantage of the setups presented and adhere to the rules of engagement to protect our working capital.

Considering the possibilities

Considering the possibilities

It’s crucial to remember that price movements usually occur in sequences, with one swingarm at a time. This is what creates the cyclical nature of price. The next target typically follows a sequence of 15 minutes, then 30 minutes, then 1 hour, and then 2 hours. As a result, it takes time to transition from one sequence to the next, and price action develops gradually over time.

scaling into a position

Just A reminder that debt ceiling negotiations are going on this week. Manage your size and stops accordingly.

If the 5 minutes breaks down, I will stop attempting the long until a new setup occurs
I am out – $172 Plus fees on 8 MES.

Just A reminder that debt ceiling negotiations are going on this week. Manage your size and stops accordingly.

If the 5 minutes break down, I will stop attempting the long until a new setup occurs. I am out – $172 Plus fees on 8 MES.

There was a lack of follow-through on the downward movement, with buyers responding from support but unable to break the 15-minute mark. The charts indicate significant support levels that were the reason for intending to go long pre-market and during the opening. However, this plan failed initially, and a bounce occurred a few points below the stop-out location. The 15-minute support triggered at the 4080 area, but I was not responsive in taking a long position.

The P89 on the one minute is too small a timeframe and pressure to push the price down, given the significant supports below. I did take the short of the 1 min P89 with 4 MES a minimal 3-point stop and failed as well. As a result, I am stepping away to allow time for reconsideration. When initial setups fail, the process of figuring out what to do becomes more of a challenge and of course, the risk of stop outs increases. -217 Plus fees. Trading MES only max 8 contracts & max stop of 6 points.

The following chart on TOS shows the details of the entries and stops. You have the balance of information from TV.

15- Minute: The Price has Entered Zone 4

In the event that the 15-minute swingarm continues to indicate bearishness, there is a chance that the market could trend lower toward the 8-hour zones. Furthermore, the breach of the 4-hour support zone by 10 points serves to weaken its overall strength.

The existing 15-minute high-pressure selling zone has reached a mature stage, and given the upward push of the 4-hour zone, it’s likely to fail. Nonetheless, as long as the bearish trend persists, it remains a viable short-trading opportunity. However, it’s crucial to acknowledge that there is a higher risk of stop-out, which should be managed in accordance with the established plan.

As per my trading plan, I limit myself to a maximum of 4 trades per day. However, there are instances where this may not be necessary, such as when a single trade trends favorably, resulting in a profitable day. On other days, I may take 2 trades or continue to wait for setups until all 4 trades are executed, provided they are taken from a zone 4 area.

Currently, I haven’t taken any trades from the 15-minute sell zone. I intend to wait and observe if the 1-minute cycle trends downward. If it does, then I would consider entering the backtest of its zones. It’s crucial to note that regardless of whether I go long or short, my entry point must be from zone 4s to manage the risk of a failed setup.

My trading plan

My trading plan also includes a predetermined maximum loss for MES and ES setups. All of these components ensure that my actions are clear, and my emotions are kept under control.

A quick reminder, trading isn’t just about technical analysis and market knowledge. Your mindset and emotions play a crucial role in making profitable trades. Mastering the psychology of trading is key to making consistent money.

Have you noticed how the 15-minute high-pressure swingarm zones have rejected the price and dropped over 15 points? It’s clear that the entry points have always been zone 4s. So, stop doubting yourself and start trading. If you wait to enter a trade later after seeing if the price moves from the zone, your risk of stop-out increases. Trust your plan and execute your trades from the zone 4s.

Just to share, I missed taking the entry at the zone. I was seeking more than what the market was offering at the time. The swingarm provided the high-pressure zone’s extreme backtest, which should have been a planned trade setup with a predetermined risk allowance. If I had executed this trade, my stops would have been in profit by now, and the focus would have been on profit management instead of regretting missed opportunities.

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Looking back at the swing setup One of the reasons to wait for larger timeframe setups and trade it in the direction of pressure.

Based on the indices, we should see a bounce by the end of the day. There is a good chance. But, do not allow this to distract from what the charts show.

One indication is that NQ has a bullish 15-minute buy bucket within a new 4-hour bucket. Additionally, there is a high likelihood of a bounce for RUT.

If we don’t take the short position in Zone 4 for 15 minutes, we, as traders, may begin to search for other justifications to enter a trade. This often leads to entering trades against the trend. However, the 15 minutes respected the trend and here we are at a new low.

To identify upcoming levels below, it’s crucial to keep reviewing the charts to the left. Specifically, on the 30-minute chart, the level to watch for is 4069, and the same applies to the 1-hour chart, which includes the 8-hour pivot.

Notice where the turnover was.

Trade in the Direction of Pressure
I had a poor performance - Trading Day: Despite Being a Seasoned Trader, I Ended Up with a Small Loss for No Valid Reason. The reason? looking back? What I posted in yellow on the above chart.

Trading Lesson for the group: Learn to Trade in the Direction of Pressure for More Profitable Trades.

If you observe the chart above, you’ll notice that trading in the direction of pressure (indicated by the yellow 15-minute sell pressure swing arm) from the areas of interest of the backtested bearish swing arm on 28/6 resulted in highly profitable trades. On the other hand, attempting to go long from the targets below was not as profitable. Therefore, it’s crucial to pay attention to the direction of pressure and trade accordingly to increase your chances of success.

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