Thursday, January 20, 2011

ZB Chart Update

I've been using the charts to short ZB since November and so far doing fantastic with no losing trades. Today gave me some clarification on the chart patterns I've been watching so I wanted to share my thinking for those that are following. I was correct back in mid December that the closing lows below 119 were the end of the downward channel that started at the highs near 135. I thought we were in for some sideways action and have been placing my bets accordingly. After a few days it appeared we were in a rough range from 119-122. But without a lot of data points I feel charting is very subjective. Until it plays itself out I wasn't sure if we were truly in a sideways consolidation range or if we were looking at a rising wedge. The gold colored line in the chart below was my possible rising wedge to watch. Since this technical pattern tends to resolve itself to the upside, I have been hesitant with my short position size. It's also why I was using short calls at times instead of the underlying futures contract. In case this broke to the upside I wanted a higher cost average on my shorts. On Tuesday 1/18 we bounced two ticks shy of the support line on the wedge, but there is no rule that says the wedge has to fully form before we get a break in direction, so again I was cautious until we got some further data points. Today we broke through the wedge on the downside and bounced right at horizontal support. So going forward I'm prepared to scale in to shorts between 121-122, with my max short exposure at 5 contracts.

Below is an hourly chart and spread sheet that show my exact entry and exit points for the JAN operations expiration cycle. My total take for this month trading ZB was about $4280. You can look up my past trade posts by searching "ZB" in the search box at the upper left corner of the screen. If you're trading ZB as well or have any questions/comments please drop me a line. If you want to follow along for the FEB options expiration cycle then either bookmark this blog or the Twitter link provided as I copy all trade posts there.!/JasonAndrewHaas

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