I would like to share with you one of the trades I made today on the CL(crude oil). It’s a very simple little setup on how I like to do counter-trend trades.
1. As you look at the picture, I am using zones to show an area of supply/demand(long term support/resistance zones). First off, I realize that the trade that I’m about to do is a counter trend trade, as the trend is down. In the picture, you will see that this particular zone shown was from a 15min chart and the zone actually dated back from December 3rd. There were both 15 and 60min zones, but I only have a screen shot of the 15min RTH chart that I used. Price is extended down here as we are way past S2 pivot at the open of the market. The Globex Low is down there, which gives me confidence that this is a good level for trying to take a counter-trend trade.
2. As you can see from the picture, I look for time to give me confirmation of the move. How do I use time? It’s simple! I look for a reversal in the first 15min of the session as well as every half-an-hour for good reversals that are happening in the APA Zones. As you can see, this is happening here on this 500 tick chart.
3. Keep it simple. Look for common price action patterns and candlesticks for entry. On the 500 Tick chart, I used an inside bar followed by an engulfing green candle to get me in. My first target was a 1:1 20 tick target, again, based on a previous dead zone(not shown). My next target was the Globex High/zone confluence that I saw up there at around $91.90. After the 20 ticks, I pulled out 4/5ths of the position and let my runner run. No matter what, at this point, I’m in a free trade and all emotions of loss leave me. I personally don’t like to move my stops until I’m ready to get out of the position completely. Or instead, as price is coming really close to my target or price action shows me that it cannot make it any further in my direction. In this case, the latter happened and I was able to get out of my runner with another 20 ticks before price crashed through the Globex Low level, then ranged for the rest of the day.
Interested in learning more from Gabriel? Then check out his blog at APAZones.com.