Trading chart pattern (Head & Shoulder)
02 September 2016, Friday. Event of the day ==> Non Farm Payroll (aka NFP).
A day where most traders get very excited and looking forward.
NFP release at 8:30pm Singapore time.
Some traders will "bet" the direction before data release. But, on our side, those who are trained in our training room are advise to "wait", and only trade after the data release.
Beside trading price action with the help of *PPTA & *PAPLines, I have also spotted "chart pattern" formed at "extreme level".
For ES, when price traded above PAPLine-R3, a Head & Shoulder pattern form.
A head and shoulder pattern is also a trend reversal formation.
It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder).
The head is the second peak and is the highest point in the pattern. The two shoulders also form peaks but do not exceed the height of the head.
Look out for signal at the peak of the right shoulder.
We can also calculate the target by measuring the high point of the head to the neckline by using Fibonacci retracement tool. Target profit is the distance between the head & the neckline.
From the right shoulder signal to the target, ES generated 36 tics profit. As a newbie trader, place 3 lots on this setup, that is USD1,350 in 2-1/2 hour. Obviously, if you are more confident, you can up size.
**Position sizing matters a lot when it come to your earnings.
Don't be GREEDY! Once the profit target reached, get your money and leave the market.
See how the market reverse and erode your original profit if you are greedy.