S&P emini

I will post ES setups and discussion here.

Here is a basic ES ABCD setup at a trendline on the 60-minute timeframe. I have a tight grouping there using many of my own uniquely derived Fibonacci numbers. I also have a modified Schiff median line set on there, and that corresponds with another line I call a 'crazy' trendline (not shown). There is a lot to my methodology, so this is not just a simple long entry at the potential trade area (PTA) for me. I need to watch the price action and get an appropriate entry trigger, and so on. So far this has really come off the area on the Sunday evening trading.

Here's the chart:



Please refer to my website to get an idea about my methodology. I have 190 free archived commentary at this point showing various aspects of my work. This should help in understanding what I show in here. Here's a link for that:

http://www.kanetrading.com/a_comm/a_comm.html


Chart courtesy of Dynamic Traders Group - www.DynamicTraders.com

I wanted to do some follow up on yesterday's chart. I'll just lift some text from the commentary I wrote today. I wanted to show this setup because I felt it was a key area for me to watch. Based on some other things, especially a move off a bearish ABCD in the Russell on Friday's open, I was not looking on the long side myself off this setup. I was using it to look for clues as to what I thought might be happening. I like to look for smaller ABCD's to 'fade' a setup I think may fail. This is a key aspect of how I like to trade. I mention all this so what follows makes more sense.

Here's the updated 60-minute chart first:



"I added the 'standard' and modified Schiff ML sets to the pattern. I should have done that before, but I get so tired of chartwork sometimes, I don't show everything I could. The arrow shows where I was watching closely, where the two key lines hit. If I got an ABCD up to that point, and then a rollover, well, that's what I mean by watching the price action for clues. We can clearly see what happened, but what did this look like up close?

Let's drop down to the 3-minute timeframe.



The lines move about a little bit as the timeframe changes, but these are accurate for this timeframe, as I recreated them here. The ES comes off that modified Schiff ML set lower //, and forms a nice ABCD right up to the two lines. This is what I don't want to see, but it may be a 'wave 3', so I'm not worried yet. It's okay if it pulls back here (just not as desirable), but it then must take off and blast the lines out.

Let's see what happened from here.



The ES rolls right off the area, goes down a bit more than I'd like, but then starts up. So far, so good. It then gets back to the area of the lines, at the third arrow, and that's where I want to see acceleration upwards. And what does it do? Goes right into the tank. The price action here was clear and obvious. Keep in mind this is the 3-minute timeframe, and the pattern is on a 60-minute timeframe. If I entered on an entry trigger say off that c point, I would be out on the roll off the third arrow for close to a scratch."

I hope this follow up is useful information.

Charts courtesy of Dynamic Traders Group - www.DynamicTraders.com

Thanks for your comments and charts Jim. I understand Median Lines but why is it called a Schiff ML?

daytrader,

The modified Schiff is one of several variations of the standard median line set. In this case the first anchor point is shifted to the midpoint of a line segment connecting the first and second anchor points. This is done automatically by the software. It acts a lot like a parallel channel that has a center (median) line with it. It is particularly useful for me when applied directly to an ABCD pattern.

Jim

Here's some additional follow up on that ES 60-minute setup. Let's start with the chart.



The second arrow shows the area of a .382 retracement, right at that median line upper parallel. The main thing was the clear setup today back at that modified Schiff median line. This was also a pattern area for me, completing right at a .618 retracement. I was watching the area of the sell off well in advance today. I spend some time in a chat room and we discussed this today before it unfolded.

Let's look at this on the 3-minute timeframe.



This pattern completed at the upper parallel for a 'standard' median line set,, right at a 1.618 external retracement. I didn't show it here, but that median line from the 60-minute came dead on into this spot. I am showing just the framework here, as I use a lot more numbers to build my areas. Notice how this set was 'seen'. I call this idea of median lines, patterns, and Fibonacci groupings all hitting together 'synergy', and my latest book is based on that aspect of my methodology.


Charts courtesy of Dynamic Traders Group - www.DynamicTraders.com

So if there is a cluster of lines it gives you more confidence to trade at that level right? Do you trade more contracts if there are more lines agreeing at the "synergy" level?

daytrader,

I am looking for a pattern, Fib grouping, and then line support for the area for the highest quality setup. I generally have three types of median line sets I like to see put a line in the potential trade area (PTA). If I see all these things I think there is a synergy effect there. I then informally rate the trade, based on my overall assessment and experience (it's far too discretionary to have a firm set of rules for this), and then I generally would trade anything that rates 7 or above. I am leery of 10's, as they tend not to 'work' as often as the rating would suggest (too perfect maybe draws too much attention?). Assuming available capital at the time, I sometimes vary the trade size based on the rating. So, with a bit more qualification, the answer to your question is yes.

Jim