The market fell short of the 93 level at 92.5 which we would still consider to be in the 93 level area, however using order flow to wait for the sellers to step in, the only entry would have been at 91.75 which was our first target. So I did not get a short trade off the top. The market started selling off hard around 10:20am EST towards our first long fade area of 88. The order flow on the delta chart showed the sellers where in control as price crashed through the 88 price level. This is a situation where you don’t want to try and catch a falling knife (unless you’re scalping the momentum exhaustions). It did appear that the market was trying to get some support just below 88, but buyers never took control. With price in our 87.25 short break-out area and sellers in control, I took a short on a pull back into 86.75 and rode it into the first target of 85.50.
RG was unavailable this morning for our usual pre-market analysis debrief. In fact, he’ll probably be out for the next day or two. I had a long discussion with him about my trade and the potential trades I listed in the pre-market commentary after I finished trading. During that discussion, I came to realize that the 87.25 break out trade I listed in the pre-market commentary was not one of our usual high probability setups since it was trading into the large volume cluster of April 11. However given the price action we saw moving into the 88 level (i.e. the falling knife), the short 87.25 breakout trade turned into a viable trade. Price had to meet resistance somewhere and below 85.5 was the next logical area where low volume started again. Luckily my pre-market commentary mistake turned into a decent trade.
RG will post a chart a little later today after he gets back to the office.
Post market comment: The 93 level became very significant this afternoon, where the market worked for nearly 2 hours. The 93 to 91.75 short fade trade was there, it just took a long time to unfold.