Last week I presented a short trade opportunity in the S&P 500 (the ES futures contract) which unfolded in an absolutely textbook fashion, demonstrating again the profit potential of the FLD Trading Strategy (we recently announced that we are bringing the FLD Trading Strategy to our popular Hurst Signals service, so make sure that you help us shape that service to your liking). Here is the chart from last week:
And here is what happened:
The market approached to within a few ticks (3 ticks to be exact) of the target, at which point it bounced upwards with some strength. As I wrote last week: “Mostly D-category interactions provide for good profitable trading opportunities, although one has to be careful to get out quickly as the market bounces up to form the second peak of the M-shape of the 80-day cycle.”
This was a textbook D-category FLD and Price interaction. The FLD Trading Strategy works on the basis that not all FLD and Price interactions are equal but that there is a particular sequence of interactions that occur. Each interaction in the sequence has its own character. Once you understand that sequence and are able to identify them correctly you unlock the doors to making consistent profits.
Notable about this D-category interaction were:
- The way in which price hesitated at the FLD as it crossed below it. The FLD is a very powerful line and it is common to see price reaching back up to the FLD as it did last Thursday.
- The accuracy of the approach to the target. The D-category interaction occurs as the market moves down to the 40-day cycle trough. There is a delicate balance of cycles at this point which usually results in the target for the move being fairly accurately achieved, with only a few ticks leeway.
- The strong bounce out of the 40-day cycle trough. One has to be nimble with D-category trades as I mentioned last week.
The next interaction will be a long E-category opportunity as price rises up to form the second peak of the M-shaped 80-day cycle.
We are very excited to be bringing the FLD Trading Strategy to our Hurst Signals service, meaning that you can trade the strategy using the simple web interface of Hurst Signals, accessible from any browser. There will also be training material to help you understand the trading strategy fully. Please let us know what you would like to see in such a service by answering these two questions.