With the president being sick with COVID, it may be a great idea to lower investment sizes. Why? Anything to do with the president realistically not becoming healthier… He says he his. The report says he is, but for whatever reason, if anything were to come out saying he wasn’t or if he had to miss work or anything because of all this stuff, you may get what’s called a fear-driven reaction where the marker can have these big sharp bearish movements.
The only way to really protect yourself against those fear-driven moves is risk management, and knowing that we could be in the next week to two weeks of a high volatility scenario leading up to the election as well with the president’s being under physician care, maybe a good idea to back off some risk. But I’m not a money manager, and I’m not a CTA. So I can’t tell you what to do.
Okay. So let’s look at the research. According to the research of the one-hour timeframe, we are inside of an up channel, and when the markets hits the bottom of the channel, the market rallies to the top channel. The market falls. Now this channel is relatively new. It started out kind of crazy. You had a little U-turn here, U-turn, U-turn, resistance there, support, support. The top of the channel is perfect. Realistically, it is, almost like it stops almost exactly on the top of the level, starts consolidating, and then U-turning.
So when or if the market comes to the top level, we’re going to treat it with much, much respect. So if the market were to rally back up, more than likely it’s going to have a sell off, so we’re going to be looking to take profit around there. The market at the bottom support is just starting to become structured. So we have a U-turn there, a U-turn there, and a U-turn right there, but ultimately, it’s still developing itself. Ultimately, it’s a very simple pattern. It’s an up channel. You have a bottom blue level with market rallies, top blue level with market falls. Currently, the market’s on its way towards the top blue level.
You could take a blind-hold technique where you place your stop in the sell zone and the limit out just below the top blue level. If you do that, it’s about a thousand ticks. With an E-mini contract it’s $5,000 of potential returns. With a micro it’s about $500 US potential returns. Because the market’s moving in waves or because the distance is so large, it could move in waves, so it may not be a bad idea to use Fibonaccis, counter trend line breaks, candlestick formations, basically your favorite entry strategy, which can lower risk. For example, we like to go to the five-minute timeframe and use tunnel trader on the way up just so we can minimize risk score a bit more.
Hey, everyone this is Joshua Martinez. That’s this week’s idea. Once again, the NASDAQ, if support holds, we’re expecting 1,000 tick bullish movement, and we’ll see you next week.
