GUNNER24 Trade of the Day 09/11/2020
The 1:3 Trade: Sell XLE ETF at 33.10
Dear GUNNER24 Traders,
The 1:3 Trade: Sell XLE ETF at 33.10
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.
Looks like a no brainer
The Energy Select Sector SPDR Fund (XLE) seeks to provide investment results that correspond generally to the price and yield performance of publicly traded equity securities of companies in the Energy Select Sector Index. The index includes securities of companies from the following industries: oil, gas and consumable fuels; and energy equipment and services.
Past week the Crude Oil started breaking down after slowly grinding higher in a tight range for 3 Months which led to a really massive looking XLE ETF sell signal, that was fired just in time at the opening auction of this week and what has triggered a truely substantial bearish outlook. Let met explain ...
Within above weekly technical chart we recognize that the since May supporting dark-green dotted 34.40$ horizontal will be broken FINALLY at this week close. This horizontal became finally broken at the opening auction of this week, what was a massive bear gap compared to the past week close.
XLE fired a bearish breakaway gap on weekly base that broke 34.40$ support horizontal what is major support on weekly but also on yearly base. This week course finally breaks a combined weekly and yearly support what doesn`t bode well for the future as ADDITIONALLY a potential monstrous weekly MACD sell signal is shortly before completition.
The weekly Slow Stokes and RSI that press down strongly already downwards, warn impressively that this powerful MACD sell signal is likely to occur.
Time count is as follows: the 2020 rally leg what began at # 1 / 2020 March low FINALLY exhausted into # 13-Fib number top, what is important countertrend high within secular bear market. At # 13-top XLE began a new weekly and monthly downtrend which is at week # 25 what fires massive bear signal. Cause # 25 made lower lows as the # 21 Fib number week the downtrend might continue towards and into next Fib number in the sequence what is the 34.
In the daily candlestick chart the price is mostly caught within a double arc pattern. Dark-red arc is main resistance. Dark-green arc was main support and will be future main support.
The double arc had an effect on the price since the year`s lows. So this double arc and the 2 lines of the double arc are rails on a yearly base. It is stunning how often the resistance arc = yearly arc resistance has been negative tested from below. In the end, the very last test of the resistance arc at past week Friday highs was the main reason that at this week open the weekly bearish breakaway gap was fired ...
We are eager to sell-short an usually very shortlived run for the next test of the yearly resistance arc cause as the market for months has not been able to break the downward sloping resistance arc main downtrend magnet so far. This situation could last until early-October, then when the resistance arc cuts the time axis (not shown) and accordingly only then perhaps will offically abandon its downward influence.
==> XLE should continue its down cycle for the entire September, at least!, because of a relentless downward-dragging arc resistance magnet.
==> Please place a 1:3-Sell-Limit order at 33.10$! Order is valid until next week Friday, 18th.
There and until then the or a backtest of the resistance arc could be printed.
Last but not least we try to derive a serious downward target with the help of the weekly up setup what is a classic 8 Fib number up, showing classic # 13 Fib number top at upper line of 1st double arc = MAJOR RESISTANCE UPTARGET!
For trading XLE use that scaling above as # 13-Fib number countertrend high is at upper line of 1st and at 2*1 Gann Angle a textbook "KISS of DEATH" event is seen & last but not least the Blue Arc is countless times tested to the dot week high and weekly closing base resistance.
This is why the Blue Arc is THE MAJOR resistance of 2020. A well-confirmed yearly resistance! And this is why the market may decline or be in bear mode until this Blue Arc officially will loose its influence what is due for mid-January 2021.
Crude Oil and also the Energy XLE EFT might drop further and further until January 2021 or so. This active time signal allows that the # 1 // 2020 Low has to be tested back seriously in further course of 2020 and yeah, even some lower secular bear market lows might be on the agenda until January 2021.
XLE might start an usually shortlived bounce into selected 33.10$-sell-short entry point as this week low is at natural 1*1 Gann Angle, what is important = usually very strong and above all natural monthly support! But in the end the 1*1 Gann Angle support should not hold in course of the next few days as the just fired bear signal likely is a sustainable one and second this downtrend should at least test and reach the 1*2 Gann Angle in trend direction towards late-September to early-October 2020.
Then the 1*2 Gann Angle, important natural downtarget magnet, runs at about 28.40$. And thus we have identified and derived a very serious downside target!
==> We place a 1:3-Sell-Limit order at 33.10$! Our order is valid until next week Friday, 18th.
==> Shortterm downtarget is the weekly 1*2 Gann Angle downmagnet what looks to be tested at around 28.40$ towards mid-October 2020!
==> Please place the SL for this XLE-short attempt at 34.60$!
Risk = 1.50$. Potential reward = 4.70$. Risk-reward ratio 1.50/4.70 or 1:3.13
GUNNER24 Trade of the Day orders for 09/11/2020:
Market: Energy Select Sector SPDR Fund (XLE)
Orders: Sell-Limit at 33.10. Stop-Loss (SL) at 34.60. Shortterm downtarget at 28.40. Sell-Limit order valid till 09/18/2020.
Markets, Money Management and Trade Size
I will merely analyze the market. There are so many instruments in the world outside our GUNNNER24 Traders use to trade, and hundreds of popular ones among them, often depending on a trader’s time horizons... I don’t consider me able to adjust the market recommendations to all the popular ETFs, different CFD or futures contracts. All I’ll analyze is pure market action - the index, stock or most current contract and forex!
The trade size you should use depends.
A) On your account size:
I usually follow the rule of thumb which says, never bet more than 1% of your account size for each trade. So I avoid overtrading...
Let’s say you have got a 30.000US$ account granting you a nominal buying power of 300.000US$ up to 500.000US$ 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: