Sugar, follow up

Here is a brief follow up on a sugar trade I mentioned recently and you can see how well a trade comes around with the knowledge of where to expect interest kick in. This is in no way predicting the future, but looking for signs of active pro money in the places where it makes sense to them to become involved. When the markets are at low ebbs, pro money buys, and when at peaks pro money sell into the buying frenzy that the herd are so anxious to throw money in there.

Long term view on the weekly. To an untrained eye there is not much different here from the chart I posted recently. But what it apparent is the strong move up and no hesitation in taking it long. Only deep pockets can cause this to happen. I drew on a line and my reasoning comes into play on the next chart.

Daily chart. The line shows nearer term support and resistance and has been broken in grand style. No signs of weak bulls and no effort from the bears to reign in the upward move. Any short term bears are all licking their wounds after seeing such a long move down, those with the smarts will have scaled out of shorts into the historic buying area from way back.

4hr chart. I moved the previous line up in order to show where closer in bearish activity has been wiped out and just look at the power behind that move. It will at first appear to have come out of nowhere, but this is the power of professional money turning the market and stamping their authority on taking it long. It is getting closer to where the herd will come in, but not before a false move may happen and get more low cost entry prices for the bulls. When you look at the long term chart there is no major profit to be made by taking this short. All the money is over head for a long way.

I am sure there are plenty people who sign up for signal services and so called secret information on the market by men in dark glasses with close connections to Wall Street. If you believe half the hype they would remind of of the guy in the cartoon who can do amazing things.

Enjoy the free charts and I hope it benefits you in some way. It is now up to you to find these entries over and over again. I have posted enough of these prior to the major moves and you should know there are no snake oil salesmen here telling you this after the fact.

Silver

My 10 mile view of Silver and more of a follow up to a post I made on Silver not long ago. Here is the monthly chart as a starting point.

The older post shows much lower interest and as you can see here even a few weeks makes all the difference and seeing this ahead of time and with enough patience is where it pays off. There is a little more time before the monthly candle prints closed and for the moment we note what is displayed to us and know trading is about what you see and not what you think.

Next up is the weekly chart.

Lower line is historic buying and of great significance, commodities do not move with such erratic moves as Forex and getting entries is much easier and many stocks are also much easier to find entries. The draw back with Commodities and Stocks is you wait longer periods of time for entries and the Forex volatility gives more opportunities and with entries that are harder to spot.

The upper line is an area of interest due to price reacting here many times in the past and its sets up a support and resistance area for the future. The candle marked X is where a decision was taken to break support and some buying came in resulting in a tail. The two further breaks lower all resulted in buying which indicated there was no desire by pro money to hit the historic buying area with too much violence in price action where holding would have been much harder.

When price eventually touched historic buying it came in pretty much on cue and the subsequent pull back was time consuming and with no wild bearish activity, all good news for pro bulls. The retest of the original move up is classic and now we see buyers loading up, all that patience to wait to see will the bears fizzle out and a retest to see if the bulls will take it paid off. Now we look for what else is shown to us. The middle line drawn is the tail of the candle that broke support support, those who went short there will now be covering and the start of this reaction is happening now. On a lower frame I will show you this.

Here is the daily chart. The lower and upper lines are in place to show a range that has been established and also where the last few candle clustered on the right of the picture show the reaction to the candle I mentioned above. At the moment there is no sign of bearish interest and the bulls are holding price. Nothing further will be known until the market opens after the weekend and we wait for clear direction.

4 hour chart. The holding move is very obvious here with any fade being bought into. Dont be lulled into a false sense of security and think this is going to result into a push through resistance and a continuation. It is possible price can be push back into the break to take out weak holders, get day traders short and reverse later on. There is a lot of clear area below price where its profitable enough for a short term reverse to happen. Keep an open mind and do not be set in a direction until its proven to be real.

Lower in the this chart is a another nice long entry where the down arrow shows a strong bullish candle that pulled in shorts, price was not taken lower and soon after another candle marked with an up arrow shows bulls coming back in strongly and off the price that they were keen on earlier. It was unlikely for shorts to come in now given they have been taken out on the first arrowed candle and other short attempts all bought into.

1hr chart. On the top of this chart you can see price holding in a range which is the reaction to the price break I showed on the higher time frames. The bulls still have the edge on price. Lower in the chart I drew a small line that shows a break of a small range and a retest. Price pushed though and came back to touch the line on a single candle and setup a bearish candle with a tail, but when formed in this area and with that price action this candle is bullish even though its printer as a bearish candle. Trading is full on contradictions if you follow a rule set and not use your logical brain. The colour of the candle is not relevant, but how the candle looks and where it forms is vital intel.

30 min chart. A little closer in on price action to help train your eyes. The same line is in place and the retest is very subtle. There will be many times when you wont see wicks or tails on all time frames and another reason you check all time frames on each successive candle close on that time frame. We are lucky here in that there is a candle with a tail and even later there was a slow pull back where another entry could have been taken depending on your capital/risk etc.

15min chart. And at the risk of getting into noisy charts this is a closer view on price action on the 15 min chart. The same line is still in place and the x candle is bearish and could have been a reversal and why we wait for the reaction, which in this case was strongly bullish, off newly established short term support, the top of a range and engulfed the bearish test. All strong signs of Silver going long. Even on this break the pull back already mentioned is now visible here as yet more testing and more bullish activity. There will have been plenty day traders who took this right up into resistance and closed off with a nice profit.

I will spare you a 5 and 1 min chart and protect your sanity. It is far more difficult to see how a trade can work out if you focus in too close and become a hypnotic junky for the right most candle tugging on those emotions.

Trade risk reward?

A number of emails arrived over the past few weeks regarding trading risks and profit taking and how to find a suitable method to use. Some of you quoted very good entries and very poor targets, other had early entries, good targets but are getting stopped out.

Every trader has to develop their own method because there are no rules to how much risk you can take and how much profit you want. Clearly your risk must be determined by how well funded you are and how much of your capital you will risk per trade including the funds necessary to withstand pull backs and spikes. The profit you want is rarely feasible and many traders want to try and get daily moves on a 5 minute time frame. This is neither reality or practical. You must trade with risk and a reasonable target in order for profits to reflect your trading style. If trading the 5 minute chart, you are better looking for 5 minute target areas for profit and not a 1 hour or higher time frame target.

The logical thing is target an obvious price area on the time frame for profit before you enter, and also place your stop on the same time frame where it is probable to hold and offer support, if going long).

Some of you asked about using a risk reward ratio as a trading method. I am not against the concept, I just dont use it and a few charts will show why. They also show my approach nets higher profits, its all rather simplistic which is how it should be.

A look at Doc's secret indicator hidden from you for a long time. Nah, just kidding.

This is a zoomed out view of a daily chart and the rats nest of lines are there to show you a few places where price reacted in the past and how we can use these areas for future trading opportunities. The blue lines are the edges of price turning.....but as I have said many time before, the market wont turn on an exact point or pixel on your screen no matter how much you see it appear to do it. Remove the black lines and learn to spot the blue lines without the need to draw any of this, I dont, and all is done by eye in a matter of seconds per time frame.

This is the same time frame with a closer in view. Highlighted in blue are the edges of historic price action and the grey box is there to let you know that it is an area and not a point or pixel. Always note how price move away from an area, is it fast or a slow build up. Both have significance and there is nothing to say a fast move is the best or the only one to choose. There are times where positioning takes longer and price can be supported, you have to read other time frames to see this and see where the money is flowing, bullish or bearish and also if its a major market time and have active players.

If you were short this time frame, can you see where obvious targets exist?
 

4hr chart. Can you now spot the target(s)?

4hr chart again, this time zoomed out. Now see spoon feeding in progress, keep an eye on the bigger picture and if needs be adjust your charts so you can see these areas before to arrive and watch how price behaves when it gets close. As price drops lower it attracts more of the herd and any recent herd longs will be stopped out because few will see the bigger picture for what its saying. As price heads ever lower, pro buyers will be lurking and dont give back what profit you have made, either have multiple targets and take a piece out of the market on each target and not necessarily go for the big hit each time, that is greed and it will burn you eventually.

Daily on gold and even though I changed instrument the principles are the same.

Upper blue line is the upper edge of historic price action where it proved traders were active. Lower black line has the same purpose. The middle black line is nearer term price action history. All of this makes sense once you can join time frames, price action and history together. This chart is the bigger picture for this final part.

4hr chart. A little closer in on the action and see how well price has turned at these old price areas. So far this chart shows little interest in taking more longs. It is this long picture that you really need to develop the utmost patience in allowing it to go through the cycles.

4hr again show with the two different trading methods to taking profits.

Lets assume your entry is the second black line down and your stop is above and the stop loss amount is within your risk. With a 2:1 risk reward your target is the purple line below and you can say was hit nicely. Here is the reason why I do not trade risk reward. Entry now is the same price, the target or targets are the green lines. Why?.....I trade from high to low and into areas where price reacted and not based on what math tells me, price knows nothing about a 2:1 or 4:1 risk reward. It is professional money who move the market and they know where the best places are to enter and exit and it makes sense to do the same when you see then move. I marked some of the possible targets, not all of them.

Spend enough time watching the charts and where the price turns and you will see there is no other method in my opinion that captures as much profit. We are trading close in with pro money and know the probable trade entries and exits ahead of time and can plan quality trading around that. All the magic of Fibonacci, trend analysis etc all falls short when you compare all of that to what I have described here. All of this has been proven since the markets began and nothing has changed since.

If you do nothing only look for these sensible targets and not be greedy an account will grow nicely and with low risk.

The easiest thing to do is enter the market and the hardest thing is getting out. But if you know where to enter and know where the take profit and have a stop set, you either win or take a loss. All you need do is prove to yourself that your trading has improved to where it makes you real money. Best of all, none of this need cost you a penny while you learn.

Sugar

A little outside of many of your pursuits, but when trading opportunities present themselves it is best to be prepared before the herd becomes involved.

Sugar on the monthly chart and my 10 mile view.

This is as much data I have from this broker on the commodity and for the purpose of this post it is adequate. What we see is price moved sharply into old demand and has just as quickly left the area. This is a sign of buying and an area that has proved to be of value on all the historic times price reached this area. There is the possibility of a revisit, but for this time frame and with a closed montly candle we gain what intel possible from the chart.

Weekly.

Closer up action on price and the same lower grey box is visible and how price has bounced off it. This month has seen price engulf the previous two months price action and has closed strongly on its highs.

The upper tow blue lines are areas where I expect to react. The lower line is the most recent break lower of price and how preceeding this was a bullish fake out in order to gain enough long orders for pro money to sell into and push price down into the area they wanted to hit the most. Given food stuff commodities have a life cycle from the farmers, it is in the interests of the traders to get price low at the right time of year if they can. It wont always happen, but the ultimate price a farmers gets for his crop is out of his hands and is driven by the charts you see here. By the time the crop is planted, growing and getting closer to harvest, pro money will have positioned themselves long for quite some time before the retail trader even thinks about it. Deep pockets are needed to hold through this.

The retail trader wont be in on this move until price is above the upper blue line, and pro money will only be too happy to let them trade along side in order to drive price here at next to no cost to pro money. Its great when a plan comes together.

Daily.


The time frame most day traders look at because commodities are slow moving when setting up and there is plenty warning of up coming trades. On this chart price has come down after the false break higher....ask yourself, who would buy sugar in the northern hemisphere when none has yet been planted and there is no data on long term weather, events in the food industry and other factors driving this commodity.

At the bottom we see price bounce hard and fast with a strong close to the day, week and month. The two black lines are near term reaction areas with the upper of most interest. This is where the false move originated from in September. Those who shorted there will be bailing when price comes back and its possible we may see a small range develop. The lower black line is a possible low price for the range, but this is speculation and in no way suggesting this is how it will play out. While price winds up there will lots of bears who need to be taken out, the smaller guys get stops taken and the herd bail when the slightest pain comes their way.

4hr.

Closer in on the daily price action now. I added a blue line to show a support and resistance area on this time frame. This was broken strongly on the way down and we need to see how it will bechave when price comes back to it. Of note is price forming deeper pull backs on the way down after breaking the s/r. The grey box is where the two black lines from the chart above are drawn. Within this box there are two significant arrowed bullish candles. Both had lots of activity based on a futures charts I was watching and there is lots of money/orders remaining up there, neither candle was a looking for supply, it looks more to me like an attempt to slow the market down. It does gel nicely with a market turn when price gains support and turns bullish. If it plays out right, price should move away nicely from those two candles.

1hr.


This is much too close in for me and I have added it in so you can see some price action from the day traders perspective. There is a minor support and resistance area that have been breached in grand style and what is known as a parabolic move following the break. This is where price is reaching for the moon and is never going to stop as far as the herd are concerned. Remember the significance of where we are in time and price. End of day, end of week, end of month, big halt to further bearish move on Sugar.

The day/week/month ended with a number of results and the one of this time frame that should be obvious to all of you, is that there are no shorty traders on this chart remaining....even though price has hit historic supply on the left of the chart. Look at the very last candle of the day. It pinned supply, supply came in, supply was held back by the bulls and the price closed well off the candle lows. Holding back the tide of short orders is neither cheap or easy to do in a short period of time. Doing it in two days is impressive and now we wait for market open and see what next week brings.

All serious traders will wait for price to run from an area where it is sensible and where there will be lots of interest from others.