One of my favorite days to trade is the day after a trend day. Yesterday was a big trend day down. Sometimes, it is hard to get aboard a trend day. Yesterday, there were several opportunities to enter short, but even so, traders often report that trend days can be frustrating events. Trades are taken off too early and sometimes it looks as if the market is bottoming, but it doesn’t. Any aggressive trade taken long would get stopped out and lead to more frustration.
If you have difficulty with trend days, look forward to the next day. Days after trend days are usually very good trading days. The volatility remains high and the entries are typically pretty clear. Today’s chart of the S&P e-mini shows numerous setups–all based on the Wyckoff principles.
The market rallied during the Asian and European sessions, then began a trading range after the US open. About an hour into the US session, the S&Ps had a well-defined Spring. This ended in an UpThrust, which didn’t result in much. Another UT occurred right at the significant low from mid-December. More UTs and another Spring during the US afternoon session gave plenty of good trading.
Days after a trend day won’t give huge trades. The market tends to move quickly back and forth as traders work to re-establish equilibrium (fair value) after the large, trend day move. You have to be nimble, act decisively, and exit within a few points into intraday support or resistance. Nonetheless, the trading can be excellent.
Springs and UpThrusts are great trade setups after a trend day (and during trend days, too). For more information about these excellent trade setups, click these links:
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