Hello everyone! Newb here, so don't (over)grill me This chart here, was uptrending nicely, and then took a breather. What would it take to trigger a buy? (i.e continuation of the trend). closing above the 17th of may high, 35.62?
I think many traders would agree that a close or two or three above that level, plus a re-test of that level in which the former resistance turns into support, with a subsequent close or two back above that level, would potentially be a decent buy signal. And welcome to the ET forum.
Thanks Xela! i appreciate your insight. Rather harsh terms, but i'm guessing those are precautionary measures?
The stock is in a trading range that includes the previous high. 80% of breakouts fail, so you want to be sure that the breakout is real. Since the breakout has been going on for a long time, I would want a confirmation of a new trend before buying.
"Precautionary" against a fake-out, I suppose ... I tend to take "second breaks" (i.e. after a re-test, when former resistance appears to have turned into support), myself: too many "first breaks" fail, for me, but if I wait for "third breaks" I too often miss the boat (i.e. when there isn't one) ... just my perspective.
I trade trading range reversals because I can't seem to "see" the trends soon enough. I recommend listening to Xela. I would look for a pullback on the breakout to get in. This is a common way to enter trends.
Volume(interest in a instrument) is reducing, am seeing more of a downtrend and should it be an "M" pattern if it falls down. As far as what is needed for Buy entry signal, draw trendline across highs, wait for closes above trendline and when/if comes back to trendline it be a buy in my style of trading offering less risk. It is optionable, so you can hedge it using a put option. Going back to 1994 monthlies, highs made with then inside bars looks like more downward motion there after, and right now company is losing money and not profitable, whatever this means any more as far as fundamentals. I be more inclined to sell short than be buying it.
I don't make trading decisions based on a single time frame, as a day trader I use three which according to my trade plan need to be in synch. In your example, I would need say a three or four hour lower tf and a multi day upper, maybe a weekly. That said, in the daily time frame reference presented, price is in a consolidation triangle. An aggressive pure price action trader might already be long on the takeout of the high of the low bar of the current pivot. A breakout trader might enter on the break of the trendline formed at the top of the tri. I agree with Xela, a better entry might be waiting for the break of overhead resistance and the test of the newly formed support. Again, without multiple time frames, I would not be comfortable with any long or short entry based on just one.
If I had to trade this particular stock, and I was watching this chart for the past week or two; I'd be long close to EOD on the 13th--looking for some confirmation criteria within 3 days; either noticably increasing volume on a long bar, or a strong close [above the range of the previous bar]. Mental stop @ 33.40. Early exit if no confirmation. Or if we had two consecutive inside bars; or an inside bar and a break to the downside. If the trade confirms I'd give it a bit more room and draft a revised plan from there. Personally I'm most comfortable being a bit quick on the entries but cutting the trade off very liberally for close to a wash if I'm not seeing the follow-up I'm anticipating.