There was no follow-through to yesterday’s rally, but bulls nonetheless generated a bullish impulse leg on the hourly chart that is likely to set the tone for today. As you can see in the chart, the first attempt to extend the bullish A-B to a C-D follow-through failed precisely at the midpoint pivot. My hunch is that buyers will need to create a second point ‘C’ in order to get rolling. Accordingly, I’ll recommend buy-stopping yourself aboard at the second ‘x’ entry point. This will be best accomplished with a camouflage entry on a chart of lesser degree, since the implied risk of initiating the trade using the big pattern is 3.50 points, or $175 per contract. Our goal when trading this vehicle will always be to cut theoretical risk per contract to more like 3 to 5 ticks, or $37.50 to $62.50. For your further guidance, I’ve sketched in the trade hypothetically. Please note that the second point ‘c’ would alter your entry price and the midpoint resistance.
