Besides getting a different perspective, this post is to understanding holding prices. This was a trade in STX taken yesterday. I had previously taken a trade in STX just after 2 pm where 51.60ish area had held and would possibly give a double bottom trade. I came out for a small profit there. However, I continued to watch it as I noticed that some buying had started coming in (same area got bought 2 days ago) and since STX was in a downtrend all day, we could get a decent trade on the covering of those positions late in the day. On a 5 min chart, it shows that the bars started hugging the upper TL of the channel pretty tight and formed a pennant. I had my entry set for a break of this. The bar after (1) was the entry bar. Below, we can see how it unfolded on a 1 min chart. (2) is the triangle formation on a 1 min chart; the upper TL was part of the channel that had formed through the day (3) broke that upper TL. Ideally, I am looking for a pullback. However, as you can see from the previous trade in this thread, that pullback may not come until later and at that point an entry would be classified as a "chased entry". So what I have done, is to try and enter on the b/o of the 1 min bar and then managing. However, here I did not do that in that fashion. The reason was that ocassionally you will get a breach of the setup and then it turns against you. Here, we were still in a downtrend. And yes, the buying was coming in, but it was equally opposed by the selling at the top of the channel. So for this to turn around, would be of no surprise. (4) was a group of 4 bars that held .96. This gave me a good opportunity to trade both ways. I had an OCO order at .02 for the breakout and .94 for the move back down. (5) is what made this trade interesting. It breaks and fills me on .02, cancels my short order and moves right back to below where is was holding at .96. I'm assuming there others trapped like me going on the upside and that would allow for the move down with more ease and so I double and enter short on the other side. Usually, I would have waited for a breach of that bar to enter, but it caught me off guard and I guess I acted reflexively. To cut it short, I took a small loss and set on the sidelines to evaluate. (6) formed a series of 6 bars that consolidated tightly. I waited for the break of this, which formed a small bar (just above the 1 min 20). I entered on the break of this bar for a long trade. I had a long bias over here because of how everything was playing out. I took half off at .45 and the other half at .55 giving me a decent $0.44 gain. Two questions: i) The usual. Could this have been played better or differently? ii) What happened at bar 5? Usually, when a level holds it holds (in this case .96). If it breaks, it goes the other way pretty fast. Here it broke and then held to come back right up.
I) I won't buy when highest high and then bars following don't have lower highs/lows always compared to highest high bar, to show retracement. Too often scalpers buying low and selling top a few times, I rather wait for little retracement for breakage of highest high bars' low is brokened. ii) Never had any type of a correct retracement. Bar after #5 makes new high but all bars following never get outside of this bars' range until 15:31 by a penny then this bars' low is brokened, so either buy lows and risk 3-4 cents or do breakout.
Wow Jefe, How did you stumble upon this after 2 long years?!!!. I'm not sure why those 2 links are not showing and since it was 2 years ago on LTFs, it's hard to obtain. However, I remember what the chart looked like and the issue/s I was concerned with. Two years later and I've seen that setup many times (thought they don't occur very often) and have figured out how to handle them. If I see anything close to what was shown in those links, I will post them here and tag you.