Morning Scoop
After patiently waiting and listening to Mr. Powell’s testimony in front of Congress yesterday, we get to do it all over again today! The Fed Chair is scheduled to continue his testimony, which will likely bring another day similar to yesterday’s. Today, instead of trade ideas, I’d like to introduce something more productive. But first, let’s take a look at where the market stands this morning.
Markets
- News: Powell set to continue testimony in front of congress, he reiterated that he will continue to raise rates possibly higher and faster.
- S&P 500 futures update: I discussed the failed breakout that we had, an attempt higher that failed which led to accelerated selling. This morning we’re near this level noted in the red rectangle, with Powell speaking can it hold or do we drop lower?
- Forecast: theme of the week is news, it’s a good day to continue to watch, if you trade no holding overnight or keep it small.
Chart Analysis
- I wanted this to be a trade ideas section, but honestly. I believe it will be more useful to do something a little different. I plan to turn this section into a chart analysis tool to help traders improve their decision making by discussing trade entry strategies and identifying clues in charts.
- Today we’re going to take a look at a strategy that I plan on implementing into my account and I’ll monitor my trades where there is a page you can track the progress weekly and monthly.
Bollinger Bands 15 minute reversion
Bollinger bands are simple they take a moving average. in this case were using a 21 day moving average. Which becomes the middle line in Yellow. The outer bands are white and that is a 2 standard deviation move from the 21 day M.A. All were looking for is a mean reversion trade.
Process
Step 1: Wait for price to get outside of the bollinger band and the candle must close outside of the band. I.e
Step 2: Look for a candle closing mostly to the downside and use this as the entry.
Step 3: Use a 1:2 Risk to reward using the current highs as exit, give yourself some room. i.e
That’s the strategy. However, it’s important to note that I’m currently testing it to evaluate its success rate. Once I have a better understanding of its performance, I can adjust the strategy guidelines and explore ways to enhance its metrics. For instance, I can use this strategy at support or resistance levels or add a longer-term moving average as a support or resistance indicator. There are many possibilities, and this is just the beginning of the process.
Daily Wrap up
No stock market tips for today as the trade strategy covers a lot. This provides an insight into developing a profitable trading strategy. Starting with a simple strategy, you test it, make necessary adjustments, and keep implementing it. Backtesting is crucial to ensure its efficacy. That’s all for today; I don’t plan on trading much, but I will be observing how the market reacts without participating.
disclaimer
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