Some days you just wait for signals that never come. Today felt like that. The Russell 2000 made a nice move in the first hour, but I couldn’t find an excuse to make a trade. We broke out of yesterday’s range, but that congestion wasn’t flat enough to call a rectangle so there was no setup this morning.

Twisting Moving Averages

Finally at 8:00 (Pacific) we had a reasonable pullback to a Fibonacci 38% of the earlier move. I would have preferred a larger pullback, but they tend to relate to the strength of the move being retraced. In this case there was an oversold Stochastic, so I considered it a cautious buy. Good thing, since it didn’t really go anywhere.

By nine o’clock we made a divergent top without even getting above the morning pivot. I won’t take a DIVERGENCE inside of congestion, but this allowed at least a breakeven exit if you took the earlier trade. And then the moving averages started intertwining — a sign that there is no trend in sight.

I’m sure some would call the rest of the day an up-channel, since those two blue trendlines are parallel, but to me it just looks flat. The distance between the top and bottom is 2 1/2 points, and I can lose money fast trying to play that type of range. Fortunately that’s not in my trading plan.

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