GUNNER24 Trade of the Day 07/21/2017
The 1:3 Trade: Buy XOP ETF at 31.40
Dear GUNNER24 Traders,
The 1:3 Trade: Buy XOP ETF at 31.40
Our 1:3 trades are A) adjusted to a longer term, having a spacious stop-loss for the development not to be endangered and B) have to show a risk-reward ratio of more than 1:3.
Major Bottom play.
XOP is the SPDR S&P Oil & Gas Exploration & Production ETF and tracks an equal-weighted index of companies in the US oil & gas exploration & production space.
Today is follow up of XOP forecast, which was out in the Trade of the Day 05/30 issue. Please click here to re-read the last XOP outlook in full length.
Then we tried a XOP short at next test of the well-confirmed and downtrend-determining lower line of 1st double arc resistance, but entry price wasn`t triggered within recommended time.
The most dominating XOM setup is an up setup in the weekly and starts measuring at final 2016 low and the "textbook" Fib number 21 initial impulse out of 2016 low has forecasted natural resistance starting at 1st double arc environment. The 2016 high week even has dented the upper line of 1st but this was a bull trap. At # 1-2016 high XOP started its serious downtrend that is/was oriented to the downwards sloping weekly 1st double arc. Main downtrend driver was the lower line of 1st resistance upmagnet which forced market into 30$ support area.
As important downtrend target the 30$ area was identified with help of ruling monthly GUNNER24 Up Setup. 30$ is triple GUNNER24 Support Magnet in the monthly time frame. The first 30$ test arrived at low of downtrend week No. 27. The second test of 30$ triple support took place at downtrend week # 29-low:
Above you see the now updated weekly picture. As expected the downwards sloping lower line of the 1st remained the most important downtrend threshold into actual lows. The # 27-low is at 29.90$ and the # 29-low stands at 29.92$. Downtrend lows worked off 30$ support perfectly, and since downtrend lows a bounce can be recognized. So we can write down that daily time frame shows a double low bottom pattern at monthly triple support magnet and that underway bounce in the weekly time frame was able to deliver a small higher low after # 27-current downtrend low.
Daily as weekly low structure signal unanimously a possible downtrend bottom.
Current 2017 low (# 27-low) arrived at a usual strong holding triple monthly support magnet.
The next interesting stuff that points to a final downtrend low made at # 27-bearish extreme is this week bounce behaviour: ==> this week opened shy above the lower line of 1st and has very high odds to close above the lower line of 1st resistance threshold. Such week opening auction last was seen in course of February 2017. Last week close above lower line of 1st occured was printed in course of January 2017....
Lower line of 1st resistance energy is strongly violated now! This points to the outcome that a stronger bounce is underway/has begun at # 27-downtrend low = possible final 2017 low.
==> I see a +50% chance that final XOP-downtrend low is in and a multi-month lasting countertrend has started.
==> If final downtrend low is in and final 2017 low was made, XOP at least should bounce upwards to 38.2% Fib retracement of 2016 high-2017 low cycle. 38.2% Fib retracement is at 35.66$, this natural resistance could be tested within a 13 week bounce cycle. If bounce has started at # 27-low, bounce is now at week # 5.
==> Shortterm uptarget for todays presented 1:3-XOP long setup is 35.66$.
A stronger countertrend according price and time - ... perhaps oriented to the 21 Fib number!? - usually is able to test the 50% Fib retracement of 2016 high-2017 low cycle. 50% Fib retracement resides at 35.66$ and this that natural resistance level could be tested at the end of a 20-22 week countertrend cycle.
==> Midterm uptarget for the 1:3-XOP long setup is 37.44$.
IF! 2017 low finally! is in, XOP, of course, should advance or tend in slightly bullish sideways fashion without making another lower low on yearly base until year end, perhaps testing the 61.8% Fib retracement at 39.21$ at end of a multi-month countertrend. It`s quite interesting that the 61.80% Fib retracement is in symmetry to natural existing first square line resistance. Together with Resistance Angle and lower line of 2nd double arc upmagnet, XOP shows major important future attraction price at 39.21$ for mid to end of January 2017.
==> 39.21$ is derivable weekly quadruple upmagnet for XOP = the most attracting future price = the most attracting and strongest future resistance.
We should try a long at 31.40$, there the falling lower line of 1st double arc is for next week candle. It is only logical that such important trail should be tested back if this week will close above the lower line of 1st!
==> 1:3-Buy-Limit order at 31.40$. Buy-Limit order is valid till next week Friday, 28th of July 2017.
==> Please place the SL for the XOP-long attempt at 30.00$!
Risk = 1.40$. Potential reward = 4.24$. Risk-reward ratio 1.40/4.24 or 1:3.03
GUNNER24 Trade of the Day orders for 07/21/2017:
Market: SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
Orders: Buy-Limit at 31.40. Stop-Loss (SL) at 30.00. Shortterm uptarget is 35.66. Midterm uptarget is 37.44. Buy-Limit order valid till 07/28/2017.
Markets, Money Management and Trade Size
I will merely analyze the market. There are so many instruments in the world outside our GUNNNER24 Traders use to trade, and hundreds of popular ones among them, often depending on a trader’s time horizons... I don’t consider me able to adjust the market recommendations to all the popular ETFs, different CFD or futures contracts. All I’ll analyze is pure market action - the index, stock or most current contract and forex!
The trade size you should use depends.
A) On your account size:
I usually follow the rule of thumb which says, never bet more than 1% of your account size for each trade. So I avoid overtrading...
Let’s say you have got a 30.000US$ account granting you a nominal buying power of 300.000US$ up to 500.000USUS$ and even more, depending on your broker and instrument. In that case your trade size shouldn’t be more than 3.000US$-5.000US$ taking into account your buying power.
Another - more conservative - method is taking into account the available margin. Usually, 30.000US$ account value equals 30.000US$ available for margin trading. So the trade size is 300US$ taking into account the margin.
Within Trade of the Day I ask you not to bet more than this 1% per any trade.
The other point to consider for determining the trade size is:
B) if your trading style is rather active, supposing you regularly have 30-50 open trades, just as I have - CFD/ETF, here some stocks, there a future contract. So I often trade risky somehow, but I split the money/bets. Even in such a nice trend as the stocks are showing currently, I never ever trade too risky. I never load the boat with 70% let 90% of my account size. 50% is the maximum.
I trade for my living and for my kids and wife as well. A regular income is important. The big-bang bet isn’t! The market would win such a big-bang bet for sure!!
When I have a lot of open trades, maybe up to this 50% of my account size/available margin I avoid trading more. So if you are an active trader having a lot of trades running at rev limiter (50% account size) please avoid trading even though we/I give you some fresh recommendations, because this would rise YOUR risk!... During the test phase that happened frequently. We had 3-5 open trades sometimes and that’s why it’s elementary important that we/you have to use tight SL. Order management is absolutely crucial for Trade of the Day.
You’ll have to place really each and every order accordingly, you know. Forgetting only one time the SL would make this trade getting worse and worse…
Based on the George Douglas Taylor Trading Technique that I’ve been studied and originally traded for years transferring it onto the modern markets by constant observation a five day pattern of the single days of the week has resulted.
The crux is not so much that the entire week has to work perfectly. Perhaps it does just at a 50% because the day patterns may shift by one or two days. In the strong upwards trends sometimes you see 4 buy days and only 1 sell day. It’s important to recognize that the day proceeds ideally-typically and to trade accordingly.
My personal trading style has always been the contrary to that of the crowds because the crowds always loose. Especially in gold and silver trading I like to buy the corrections Monday to Wednesday and on Friday if the day patterns correspond with some important GUNNER24 Signals.
I use to go short intraday just on Thursday when the week high is sold off AND provided that the corresponding GUNNER24 Setups signal so covering the shorts when the cycle is resumed.
The ideal five day pattern in an upwards trend – precious metals and US stock market – Do use those patterns for your intraday and swing activities!
Monday: Buy day. Strong up-day. Low established first. It often ends at the day high. Unthinkingly you may buy all the intraday corrections because the week high comes later in the course of the week.
Tuesday: Buy day. Weaker up-day. A higher high is produced. As early as now the crowds ponder whether the prices mightn’t run too high partially going short already. For me it’s the day when I can cover my Friday and Monday longs. In intraday I try to go long in case of corrections until the Comex opening.
Wednesday: Sell day. Actually the day for covering the longs and for the first short entry. It’s got some different forms. It closes at the same level as it had opened. Frequently at first the high is established because more and more traders short the market. Here the longs fight against the shorts. You recognize that if many teeth, many nicks, many spike candles are to be seen in the chart. On Wednesday I use to do nothing. Only at a 20 to 30% the shorter hearts are pleased because during the whole day there’s only sell-off.
Thursday: The classical sell short day. Because the Wednesdays often close as they had opened the market participants have to cover their shorts because in the beginning the market runs quickly upwards…! And frequently they turn their positions into the high direction being caught on the wrong trail again. Then the market often lays down a beautiful sell-off. In the evening mostly a strong rally follows. That’s where we cover the shorts.
Friday: Classical buy day in the upwards trend. It’s nothing for weak hands. Here’s where you buy the positions near the Thursday lows which you cover again next Tuesday/Wednesday. If you discover that the prices have steadied or even are rising a little bit by closing the five day cycle should continue in the following week.
In the charts we work with the following symbols: