Now to make it even more interesting. Again speedo will see this too. Here is another MTR setup possibility. 1) trendline break 2) that goes thru 20 ema 3) move back down to test the previous swing low. 4) HL MTR .....but wait not quite yet. Hold your horses. Need to see a bull bar and a H1 that goes above that bull bar to enter long. It may give that setup on the open on 7-29 but I suspect we will not see that, but likely see another leg down Right after the open to the bottom 1/3 of the range (yellow lines on previous charts I marked up). But.......if it were to give me the HL MTR with two bull bars back to back the seco d one with a high above the previous one (H1) then I am going long to top of the range then exiting followed by immediately going short ...as we will be in the top 1/3 of the range. So, two MTR’s Good grief. You might say now I am really confused. Don’t worry about it. It is still range trading. Remember the 80%. Both MTR’s just happen to be within a range. In this latter case it could have two legs up so I might would wait and see before exiting my longs entered on the HL MTR followed by shorting in the top 1/3. It depends on the dynamics i.e. live price action at the moment.
Hi, today we did not get the second leg down but it opened with a gap up and made a new high just before the close. Following your methodology one would be selling now because we are in the top 1/3 of the channel and in addition a doji bar may signal a reversal. However there is a risk of a breakout to the upside tomorrow or even another gap. Volume has been growing together with price from mid-day until close. Is this risk 20% or so?
I also add SMA 100 which explains why price met strong demand here so no second bear leg occurred, and it was also previous high on the 16th.
The scenario that occured was basically the HL MTR of my post #771. So I would have been long to the top. As tomm July 30 goes. I would be shorting and adding averaging down if it opens in the top 1/3. There is an 80% chance that if it breaks out the top of the channel it will trade back into it within 5 bars. There is a 20% it will keep going up. The latter is the least likely event. Myself I would bet the 80% and be shorting. However, if I get loaded up short and it does the least likely (20%) then I am exiting with a loss immediately once it breaks out of the top with FT (follow thru). I will then look for an opportunity to go long. Probably on a pause or PB and I will double up my previous short amount but go long. I would then shoot for a measured move up from the BO point at the top of the channel to middle of the first pause then extrapolated that same amount up. If the least likely event occurs (a successful BO out of the top) I would prefer it not to close the gap between the lows of any bars after the BO and the top of the channel. That makes for a stronger move on up. One word about stops. The SL on a short position taken in the top 1/3 after the open needs to be wide enough that it can attempt to BO out the top but fail within 5 bars or so and go back into the channel. So, there is that risk of a wide stop. There are a number of ways to figure it but I would project 1/2 of the width of the trading range up from the top of the trading range and put my stop there. If I am short and it has a successful BO's out of the top of the channel that is the max I would want it to go against me, as my short premise would be totally wrong. In all actuality I probably would exit the shorts before that and double up and reverse going long, if I determined the BO north was probably not going back into the range. But it is good to have a hard stop at the max (premise broken for shorts) level in case of a sudden surge up. Since there are no prior swing highs high enough to place the stop loss above them this is how I would figure my stop. We will see tomm what happens. If the 80% works out and I am loaded up short in the top 1/3 shortly after the open my PT would be any decent profit towards the middle or bottom of the range. I actually do think the 80% failed BO is what will happen. So my first inclination is short. But you can never know with certainty. Just have to be prepared for either scenario. It could get another leg up from my HL MTR of post 771 because we do have a PB right at the close today. Often a MTR will have 2 or more legs. I know this sound if this, then that,..etc. But that is how I trade. I look at the patterns (channels..flags..wedges..etc..the bars..the MA's) and the contexts larger and immediate and then I try to postulate what I think price is likely to do based up that info. But I try to have a game plan in my head that if it doesn't do that then this is what I will do. Does that make any sense?
Hi, it does make perfect sense what you write, because you understand price behavior is unpredictable and can go either way. One must be prepared for whatever it is doing. I also think before making an order entry, what happens when I am wrong and where my stop is. I just want to be where the market is going because he is always right. Today it was not possible to short at top of range because of market gap down.30 mins after open it touched SMA100. So we expected this but me not with such a velocity. I have been mislead by yesterday's increasing volume trend. Was it fake or just meaningless? For tomorrow I am looking at long entries between 11,30-40 and a stop around 11 But if it is going straight up from open or gaps up, then probably long as well but smaller size looking for around 11,80-90 target. What do you think? Should the stop be below Jul27 bottom or between there and bottom range?
Poljot, I an on a trip out of state but here is what happened to your chart since your last post #775. Three more channel trading opportunities that covers thru today Monday, Aug 3rd. A long. Then a short. Then a long. Again, 70% of BO’s of the top or bottom of a bull channel will fail, and within 5 bars price will be heading back towards and into channel. So, I want to fade the edges. So, on the last day of your chart in your post #775 I would be going long. It opened gap down. Traded down into the bottom 1/3 (good for going long and adding) then next day it traded up and thru top of the channel. Good place to exit the longs of the previous day. The top BO fails in two bars so good area to short and next cover at the bottom. Then since in the bottom, after covering, go long and exit on the move up towards the middle that happened today.
Look I mention 1/3 top or bottom as entries and possible exits but understand an aggressive trader can just divide the channel into two parts and do the same thing.
volpri, I think no technical analysis can explain what happened today. It dropped 12% at open and then made new highs at the close. Long @11 but got stopped out quickly. Should have been scaling in instead. I guess the lesson for today is not to trade around earnings announcements. One should short now around 12.30 with a stop around 12,70-80, right? Anticipating another failed BO within 5 bars or so. Or, is it more likely now after earnings results have been digested and considering quick rebound, that our old resistance line is going to become our new support ?
I would wait a-bit on this before shorting. You got two Really strong bull legs from way below the bottom of the channel Thru the top with closes above the top and a gap between those bars outside the top and the top of the channel. In others words a gap between the bottom of those bars and the BO point. Plus a close above the ma’s this may end up being a successful BO out of the top of the range. Now bull channels usually function as bear flags on a higher TF. That means That a BO, when it happens, has more odds of it taking place out of the bottom. Since it might Have a BO Out of the top this time (the least likely event) If it does then my profit target is A MM up. One way is measure the width of the channel and then extrapolate Upwards from the top of the channel. Bottom line: I would wait to see if this evolves into a successful BO out of the top. If not, and instead price trades back into the channel I would look To then short. But I would not just short necessarily on the open tomm.