I’ve been wanting to start a Play of the Day section on here for quite some time. As much as I’ve got going on, who knows if I’ll keep it up or not, but I wanted to post this play that I saw develop yesterday in the Russel 2000.

For trend trading I mainly use the 610 Tick chart, but I keep an eye on the 5, 15, & 60 minute charts for confirmation since I know many people use these exclusively. I also follow the minute charts so that I can pick up on any pertinent volume patterns. So here’s what I saw:

The ER2 had been falling all morning and at 10:15 exchange time had a nice little Wide Range Bar (WRB-) blowoff with some pretty good volume hinting at further downward pressure..

We then saw 3 green 5-minute consolidation candles with decreasing volume again signaling further downside. We then see a nice 610-tick reversal setup around 10:26. All systems look GO BEARS…but wait! This 610t candle is completely engulfed on the next bar; The first chink in the bear armor appears. But be careful that you don’t go long here expecting a trend continuation…this is a scalp setup at best.

We then see some nice follow-through on the 5minute chart with a 4th green candle with very nice volume. Things are looking better for the bulls, but at this point they need a break, so lets see what happens next….

The bears fight back on both the 5 minute and 610t charts, but the volume’s not anywhere close to that of that last green bar…hmmmm. 3 reds, then 4…here we go, this 4th red candle finally has some volume on it as price breaks to new lows. But before you can bat an eye at 10:53 the Bulls get their second wind and push back with all their might closing that 4th red candle green with huge volume!

And as if that weren’t enough to get you salivating, at 10:56 on the 610t chart as the price prings a hammer, the TRIX starts to turn higher…a divergence is forming on both the 5-minute & 610 charts! Coupled with the price & volume patterns, all systems are go on a breakout above this 610t hammer as it would also correspond to a breakout above the prior 5-minute hammer with explosive volume.

They don’t get any prettier than this and I was just lucky that I hadn’t taken off to go to lunch early like I had planned. It was a quick-easy 20 ticks for me, & I could have gotten 40, but I wussed out around the 711 consolidation.

It takes patience, but success really can be as simple as sitting in front of your computer waiting for this setup to occur. Unfortunately, our thoughts and emotions find ways of sabotaging us the other 95% of the time. Trading is simple, its that 95% of the time that’s tough.