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This setup keeps repeating…

What’s something that’s really special about trading, Gang?

The fact that patterns and repeating setups are all over the place… and once you identify them, you can trade them frequently and see a steady source of income.

Of course the trick is identifying them.

I want to share with you one of those repeating setups we’ve been seeing in Bonds lately.

In fact, just last week we saw it again.

Here’s what we’re looking at…

STEP ONE: Take a Look at How the Bond Market Got to Its Current State

Recently the Bond market’s been selling off and experiencing decent chop.

Now most people can see that just by looking at a chart. But that’s not necessarily the trick to identifying these patterns. We need to acknowledge what got us here.

Why?

So when we see those signs occuring in the future, we have a pretty good understanding of what the end result will be.

What direction was the trend that preceded the chop?

The trend was up. So that tells us that the chop’s going to carry with it something I call “bullish bias”. Because of this, I’d much rather focus on the long side of this contract of /ZB. Something to note, Gang. I’ll be talking about /ZB going forward, but what I’m saying could also be applicable to TLT if you’d rather look at that. We’re looking at /ZB in particular because it presents some great leverage options.

STEP TWO: Actionable Entries and Exits

Now back to the market…

When you’re in chop, it’s important to differentiate what’re actionable levels for either entries or exits. If you’re looking at a chart, the levels to the top side are potential resistance… therefore, potential exits. To make this simpler, they’re profit targets really. Then the bottom of the range is the zone for potential entry.

Now you might ask, “But what about all that in between space?” Well, Gang. I consider that no man’s land. That means if we’re hanging out in between my entry and exit, there’s really nothing for me to do.

But what about once we get to the edge?

Just like I’ve done previously, I’d look to get long with an initial target in the 160 to 161. That’s a very small upside target, I know. But the hope is that at some point, we get past T1 (the first target) and we continue to move higher towards T2.

STEP THREE: Get Yourself Paid

Worst case scenario?

Well if we don’t reach T2 it’s really no harm, no foul. By reaching T1, we’re doing our job — we’re paying ourselves. If you remember, I talked about this previously — about the importance of paying yourself, and how it’s really the only job you have as a trader. You can read about it here.

Now if you’re looking to consistently pay yourself… that’s our goal in our Futures Membership, and you can grab a first month trial for only $7. Obviously I can’t promise you’ll make your $7 back… but… I feel pretty confident about it. Grab All the Details Here.

1 thought on “This setup keeps repeating…”

  1. Nice as usual Raghee, funny I was just looking at TLT today thinking it may be time for a revisit on the Daily, it had been the choppiness of 130 that had kept me out.

    Reply

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