Trade of the week 26th July 2010 – Click to expand charts

Summer trade is definitely nearly upon us. I tend to look for a move to trade off the open and then either to see the market settle into a low volume trend or stick in a range. Either way the lack of volume can make life hard.

Framing the day can help you visualise where the market may want to go or the boundaries it could stay within.

Today as always one of my trade premise was the gap fill. This was even better today as it was a range fill. We’ve been up for several days in a row and the gap wasn’t particularly driven by news.

My other premise was a potential move to the last swing high on the daily chart of 10600 on the DOW:

Either might work, I use them as potential targets and then watch the market action at the open to determine if there is any trigger to enable me to take the trade.

For me today the trigger was the failed attempt to push higher followed by a heavy drop. Short on. Obvious stop placement above the high, target range fill.

I was pushed for time with this one though and I had full size on. I was waiting for the final push to yesterday’s high, but it just didn’t make it. I closed 30 seconds before the data was due on the low bar push. I NEVER hold any positions over data, especially not full size.

Ok so I didn’t quite get my target but a great trade nevertheless, which allowed me to pick and choose a few nice plays later in the afternoon with no pressure.

Framing the day’s range