hi, has anyone well defined technical rules for entering a pullback and how to distinguish between a pullback and a reversal ? kind regards, paulus
The way I see it, if the signal is on a 30 min. chart, it's a reversal. If it's on a 3 or 5 min chart; it's treated as a pullback, until the 30 min confirms it as a reversal. -Fast
Yes; but only up to the 30 min. I don't continuously go to the next higher time-frame; time-frame after time-frame. My trades are very short-term (a few minutes hold-time) so I usually pay more attention to the 3 and 5. -Fast
I swing trade pullbacks. Today, I bought the following: INFY @ 86.55 ITW @ 77 BDK @ 49.49 CAT @ 76.90 You might want to look at daily charts on these stocks to get an idea of levels that caught my attention. Look for simple technical indicators yesterday, and what has happened today in terms of follow-thru on further weakness. Remember, indicators only help you set up for the trade. You need price action to confirm your suspicions. There is no clear rule for defining a pullback vs a reversal. It is all a matter of playing the percentages on levels. In order to play pullbacks, you will usually be entering at the point of max fear in the stock, and also generally in the market. No pain, no gain. This takes a lot of confidence in your system, and a lot of experience.
Use an oscillator, look at a normal pullback.. and what a typical reading is. Look at a fake pullback that turned into a reversal. Compare the readings between the two, you should have an idea what is too strong a pullback to be normal. As for fibs, 61.8 is about the max to even have a shot at retesting the top. Any deeper pullback with conviction and it doesn't look good. Plenty of nuances to confirm what's going on.