Understanding the context we trade

Hi

Some of you may have taken another trade yesterday, for others the entry will not have been strong enough. We saw aggressive buys and then a pullback to just below the daily pivot, at his point we got an reversal off the higher low and entry above DP. We could enter here and got some accelerated buying. Price never quite made the DR1 Level, and will have needed to exit as price fell for a small profit or breakeven.

We had a similar set up latter but would have passed as it came off a LOWER low, with an entry below Daily pivot.

Context
The market is now rising on suggestions localized elections in Spain strengthen the governments mandate to ask for a bailout. Of course at this stage here is no sign of a bailout request coming. We  will still be watching Spanish bond pricing and especially the 10 year bonds closely as borrowing costs push towards unsustainable for the Spanish. At any time supportive news on the Spanish bailout could spike price otherwise I am expecting a slow day probably downwards day.

Technical Analysis
The tiny move in the daily pivot shows how little the market is moving at the moment. The market looks largely stuck and we need to see a beak of this range to be able to trade. Daily pivot has been tested from a lower high and lower low which gives us just a slightly bearish bias.
The zone between yesterday’s high and weekly pivot, with a support/resistance level and the Daily pivot running through it is to tighter zone for us and we will stay out of it.

The Day Ahead –  
The first thing we need to do as traders is understand the context we are trading, low daily ranges, stationery daily pivots and we need to take a step back from trend trading…. We need to wait and let the market act and follow it. We can’t lead it
Bias- I think the market will slide down, and then may spike up on Spanish bailout or bond news….
 NO TRADE:  I wont trade between yesterdays high and Weekly pivot.
BEST Short entry; I need to see a move down and break of weekly pivot, with a pullback to get an entry. I would most off at DS2. This is my favored trade.

BEST Long Entry; I need to see yesterday’s high broken and tested from above. Even then I would be trading from DR1 to DR2 and I can’t see it getting there without news out of Spain.

 No RED NEWS Today

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If you have any questions you can submit them here or email me at paul@paulbotterill.com
All the best
PBT