Forum Clusters 111115.xlsx

After weeks of neutrality, the IWM robot has finally found a high probability trade on the long side.

From a reward-risk perspective, the logical reward could be a test of the 200-day moving average (77.58), at the top of the second cluster resistance. The actual selling pressure strength is quite light between the limit entry of 73.28 and the 200 dma: excluding daily levels, only weekly pivot (73.88) and weekly R1 (76.14) could act as potential speed bumps. At least, this is the theory in a news-neutral environment.

On the risk side, I feel quite comfortable with the setup. Not only do we have a fail-safe stop and reverse signal pending if the 20 DMF turns short, but we can also enter the trade very near a massive support cluster with a total strength of 27. Yearly pivot (71.84) and quarterly pivot (71.25) have acted as a successful support confluence many times in the trading range and the initial stop (68.69) will be further protected by the very symbolic 50-day moving average (69.89). If the robot can enter today below the limit price of 73.28, he will adjust his stop 6.26% below the actual entry execution price.

Tuesday is also a potential turnaround day in opex week and that scenario will be helped by a rather important POMO and Twist operation from the FED. The usual pattern would be weakness early in the day followed by a strong intraday reversal. All in all, a pretty satisfactory setup for an opportunistic trade objectively confirmed by the robot.
Billy

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