Swing charts, stop-loss orders, and good-till-cancelled covers in a bond-market coil

Restricted decision tools

The case restricted its decision tools to a monthly swing chart, weekly and daily bar charts, a daily swing chart, time and price-range divisions, and a reading of price formation and trend. A swing chart is a record of successive swing highs and lows used to judge whether trend character is intact or has changed.

Two monthly scripts and a weekly coil

The monthly swing chart was used to pre-specify two mutually exclusive outcomes at a prior contract high: a break toward a higher resistance, or a double or lower top that could start a major decline. Editorial: Those two scripts were written before the weekly coil had to choose a direction.

A weekly coil, a narrowing symmetrical triangle, was built from two upward waves. Its approach to the apex was treated as a directional decision point, and the coil was treated as approaching culmination once price neared that apex.

A four-part daily sell signal

A four-part daily sequence was treated as a short-term sell signal. The sequence was a sharp rally, a close at or near that day's high, a next-session open that holds below the prior close, and a close that undercuts the prior day's low near the session low.

Because the daily swing chart still showed higher swing lows, the first short was limited to a single contract rather than a full-size entry. Editorial: Higher swing lows meant the downtrend script had not yet been confirmed, so the first short was a trial rather than a full-size commitment.

Day orders, then a working stop

Before the first short, a sell and a protective buy-stop were entered together as day orders. After the sell filled, the buy-stop was converted to a good-till-cancelled working order. A stop-loss is a pre-placed protective order that bounds loss before entry and while a position remains open. A good-till-cancelled order is a working order that stays active across sessions until it is filled or withdrawn.

The first protective stop was placed above the open of the sell-signal day, with a more conservative alternative noted above that day's new high. The first short was closed when a later rally broke the prior high and triggered the protective stop, after the last daily swing low had held.

Re-entry and two working covers

A later short was taken only after a daily swing low broke for the first time since a major February low, together with a reversal day in a pre-marked price and time window, a minor double top, and a lower-high plus lower-low configuration. A reversal day is a session that makes a new extreme and then closes back toward the opposite end of its range.

After re-entry, two shorts were assigned different jobs and different good-till-cancelled buy-stops. One was held for the larger downswing. One was sold on the next minor rally as a shorter-horizon release. A separate good-till-cancelled cover was left at a half-range support of the prior advance.