Thursday, March 13, 2008

Driving the Range with the Russell

Some mornings are just setup for playing the range and this morning was one of those on the Russell. A nice tight range with divergence setups usually equals some good opportunities.

Trade setup this morning was divergence of the oscillator with price and our 61% fib retracement.

Price setup a positive spinning top at the first sign of divergence (see first arrow), however, it failed to follow through on the next bar (hence the 1st setup never triggered). The second setup was a Harami bar (see next arrow) which confirmed one bar later that price was turning around.

Entry 654.90
Stop 654.40
R = 0.5 ticks
Initial target 658.70 (61% retracement)
R to R ratio: 7.6

Actual exit was at 660.8 for +5.9 points or 11.8 R
So why didn't I exit at the 61% retrace? Because price moved right through it without hesitation and unfortunately I was a bit slow to hit the 100% retrace at 661.7.

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