Chart courtesy of AMP Trading, get a free demo account and paper trade.

ES emini chart, marked up with futures trades, for 09-11-09

Before we start, did you remember to transition from the U contract to the Z contract today?

Okay, it was a great day to trade, lots of nice set-ups and the market moved in a fairly orderly fashion.  The stuff we traders just love to see, although it did start the day a bit choppy and I stayed on the sidelines until it settled down some.

Notice the high for the day was “dead on” the R1 line.  The R1 line was an important line today, as it is many days.  As I have often said, it is imperative to get the pivot and R and S lines drawn in before you start trading, and today was no exception to that rule.  While the market does not necessarily ALWAYS respect these lines, they are often the basis of an entire day of trading.

I added a little more detail to show you some of my secondary thinking while I trade.  When the price action pierces the  outer Bollinger Band lines, especially if it closes outside the bands, it is often an indication of a change of direction.   I highlighted two instances when the price action was outside the Bollinger bands and the market did, in fact, change direction.  One of the the instances the price formed a perfect fractal.   Also, our CCI and Stochastic indicators pointed toward a change in market direction.  Further note that these trades were long and below the 89 period SMA, and you know how I hate countertrend trades.

I made one bone-headed trade mid afternoon and gave back some hard earned gains.  I was impatient and the trade was poorly thought out and hasty.

I also highlighted an area of trading where the CCI hung on the +100 line for several bars, which does NOT indicate real decisiveness in market direction.  I stayed out of the trade for that reason.

Finally, you will see a long trade, and a good one at that, I passed on because we were well below the 89 pt SMA and I just wasn’t comfortable with the set-up.

All in all, this would be a very good chart to study, as there are several dynamics in play throughout the day, and you can get a good feel for the way I trade by analyzing the moves I made.   My DecisionBar indicators also supported the trades I made.  As always, I truly believe in the DecisionBar system as a great filtering mechanism.