Trading the Sweet Spots is what every trader dreams of and is typically where they feel they are in tune with the market. Yet, quite often they never correlate why they are in tune with the market on one and not the next.
Yesterday, before the market opening on Sunday, I captured each chart and wrote (very simple, easy-to-read comments on where I thought the markets would likely go). I knew it was going to move because there were a lot of “SWEET SPOTS”. What do we mean by trading the sweet spots? It is an area on a higher timeframe that has nothing standing in the way of a good trade.
Trading the Sweet Spots
This was the 45 minute chart of the Dow Jones emini on Sunday at 3:52 pm ET (click to enlarge):
Notice the WHITE SPACE between where price is and the double lines below. As you can see when I captured the chart, price was at 17729. Notice the double lines at 17550 and around 17500.
Trading the Sweet Spots is an easy technique that everyone can use. It is simply taking the CURRENT PRICE minu WHERE SUPPORT IS or 179 points (17729-17550). That means there is a potential of 179 points of movement if price begins the downward path. Then on the first entry potential buyers decreased as it approached the Average True Range Stop (+ sign) indicating buyers were not entering. The second entry showed a dramatic increase in buyers (over 2000 more buyers) but price did not reflect these increase.