Play: Mean Reversion Sustained Auction
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Market Narrative
The previous day closed neutral. Asia took it way down to H4 QLo and started consolidating. Trend is up 3/3. 1.32xASR Below Value, Outside Range, Large imbalance.
How was the Entry?
Entry was off the break of IB which was good expecting a momentum sustained auction.
How was the SL placement and sizing?
SL was a bit wide. With expecting a sustained auction on momentum the SL could have been standard SL sizing but I wanted to put the SL below the body of B period in case of a pullback as IBR was quite wide at 0.65xASR. I’ll be mindful to never exceed the standard sizing because if standard sizing is not enough I should have probably not been in the trade or my entry was off.
How was the profit target?
Slightly over 2R at value edge but with better SL placement this would have been even more.
How was the Exit?
Exit was bad. I chickened out and wanted to pocket some profits. So took 0.3R and saw the trade hit 1.9R (more if I had better SL placement and thus sizing). Although I would have taken 1–1.5R for sure.
The reasons for taking off the trade prematurely were: W1 supply right above, somewhat wide IBR (but not too bad), summertime trading thinking there could be less push behind the momentum move.
What would a price action-based exit have done for the trade?
1R but I would have taken 1–1.5R, trade went up to 1.9R
What would a time-based exit have done for the trade?
0.4R
What did I do well?
I did well to take the trade even though I wanted to take it easy.
What could I have done better?
I could have let the trade go longer. At least wait for another M15 close and see if the auction was sustained or not which it obviously looked like.
Observations
Sustained Auction even though on momentum was a low initiative activity day.
Missed Opportunity
There was an auction fade play after a test of value edge. Although with the trend being up 3/3 it would have been slightly risky. Also there was no TPO structure build up at the moment of the move. It was the 2nd DTTZ and M5 was faltering and closed with a big bar down with a consequent retest of newly formed M5 supply. It would have hit 1R with not much issue. 0.4R at time-based. 1.3R at overlap noise cut-off.
TAGS: Trend is up 3/3, Below Value, Outside Range, Large imbalance,
Premarket prep on the day
Daily Report Card on the day