Protecting yourself in range bound markets

 

If you watch the emini like I do every day then you’ve seen the lack of volatility the past few trading sessions. Yesterday’s trading range was 8.75 points wide not a lot of opportunity for directional day traders. However I’m a firm believer that sometimes the best trade is no trade at all.

Yesterday was the perfect example of lack of trading opportunities. The ES had absolutely no direction bulls weren’t in control of trend neither were the bears. This was a complete example of the market building value or what some may call being range bound. When the market is building value there are 2 very important things you must do number one decide if the trading range is wide enough for you to participate and number two don’t over trade the range this brings me to another phrase I like to use its called “don’t let the market chop you up”

I believe we will continue to see this kind of trading volatility for at least for the rest of the week I will be paying close attention to the weekly EIA petroleum status report on Wednesday and the Fed chair Janet Yellen speaking on Friday afternoon. These two events can add a knee jerk reaction in the market and might add some much needed volatility.

Because we are trading in a range currently I’m looking at both sides of the market to the upside I’m looking at these levels

2070.00 to .00 if we break above 2070.00 my next target will be 2074.25 if we break above 2074.25 look for 2077.25 to be our next stop before heading higher. This market has lots of resistance levels so look for these levels to be tested rejected then possibly accepted.

To the downside I’m watching 2054.00 to 2050.00 if we extend to the downside more my next support level is located at 2047.25 if the bears continue to hold on to the trend of the market look for our next target to be 2045.00 and then 2042.00