NVDA gapped up on high volume. On the 5 minute timeframe it carved out a higher low and set up a nice base and break pattern. I took a low risk long and was prepared to bail if it could not break the ORH given the weak market open. My worries were unwarranted as you can see from the 15 minute timeframe, it did a vertical move, exceeding the 75% Fibonacci extension of the previous day low to the ORH.I took a partial and moved my stop just below the first consolidation bar. After consolidating for about an hour, it extended up to the 138% Fib. level at which point, I closed my position thinking that was a near top. I was wrong about the top. NVDA, as you know is in blue sky territory, so its hard to know when it will stop.
I'll be back later this evening to look at HOKU, another one I fumbled with (early exit only to get back in later). HOKU is a great example of how to use pivot points from the longer timeframe to help manage the targets.
11 comments:
Jamie - I 'm surprised you didn't go short this morning. HRB set up nicely and collapsed for a while as did CCL. What were your thoughts on those two?
Jamie,
Awesome trade on NVDA. I was watching it to get in and missed the take off of the 10:15 (15 min.) candle. However I did catch HOKU at 8.1799 on the 12:15 candle(a bit of jumping the gun) but it looked good as long as volume came in(which it did on the 12:30 candle). I got lucky and rode it out all day(watching for it to break thru the 5 ma on the 5 min chart), sold at 9.79 when the 3:00 candle came down hard and fast. I was looking to short it when it went back up for the test of the high with lower volume, but no shares were available(which was good cuz it did not drop with the close of the market coming up fast. Hope you cranked on this one also! If shares available thru your broker, it may present an opportunity to short in morning. Thanks for all your hard work on the blog and the trades!
Bigfish
Joe,
HRB set up nicely on the 3 minute timeframe and extended to the 62% level. I would have considered it a relatively low risk B&B entry. CCL moved too quickly and did not base so I would have passed.
The reason I did not go short this morning is because of the gap down. After the first 15 min. bar, the Nasdaq looked like it could reverse at the next pivot. In the end that's what happened.
Bigfish,
Nice trade. That's good to know re: no shares available to short, because there's a short squeeze going on with HOKU and if it takes out today's high the next PP is $11.00, followed by $13.00. A weak retracement will leave the door open for further upside. Keep it on your watchlist.
Hi Jamie,
Trying to understand when is a good time to enter under opening range high? I saw your JCOM example and comments that if stock gaps from flat base, you would most likely wait for it to clear opening range high. I thought NVDA was pretty flat the day before and it is better to wait for it to clear opening range high. No?
Appreciate you can guide me through you thought process. Thanks
YR
Jamie,
I'll keep those longer term pivot points in mind as spt and rst. I'm favoring long entries and not shorting at the moment to keep the focus on entering/exiting long plays. Way to go on hoku nvda. Wow they just kept blowing past fibs and pivots! Thanks,
BL
Hi YR,
You're right, I did say that yesterday, when I should have said that I prefer to wait for the ORH to be taken out when a stock has a wide gap from a flat base.
My thought process on the NVDA trade was if I wait for the OR to be taken out, I won't be able to take the trade because my risk reward ratio for a 38% Fib. ext. target will be less than 1:3 if the OR is cleared on a WRB. The entry I took allowed me to get by on the R:R ratio.
I know this must be quite confusing for new traders but basically I look for a stock to retrace no more than 38% form the ORH to the previous day low. Then I look at high volume and I prefer when volume declines as price consolidates before breaking the ORH. After that I calculate the R:R ratio for min. target of 38% ext. Then I look at candlestick patterns bullish versus bearish. I don't like it when the trigger bar is a doji or has a long upper shadow on the 15 min. timeframe. I want the 5 period ema to be reasonably close to my stop when I take my entry. At the breakout, I want to see an increase in volume. If the setup and entry are good, price will move forward rather quickly.
Hope this is helpful. As you develop your trading style you will discover what works best for you.
Welcome BL,
Not sure what spt and rst stand for?
support and resistance. my abbreviative nature....
Thank you Jamie, I have a better idea now after your explanation. If you do n't mind, there are a few other areas which I hope you can give advise based on your experience.
1) How do you define a wide gap? By dollar amount or %?
2)Suppose the 5EMA on 15min chart is some distance away, but on 5 min chart presents narrow range bars with low risk entry. How do you deal with such situation?
3)I recall reading somewhere in your blog about stock testing support 3 times and then it is likely to break down? (or up?) I can't seem to find that comment. Need some help here to rejolt my poor memory.
Thank you again
YR
YR,
#1. I define a wide gap in terms of percentage. If a stock gaps up 10% it might take all day to consolidate the gap before it can start moving higher. It all depends on the reason for the gap as well. So you have to look at each setup individually. Also look for long-term resistance when gaps are extremely wide.
#2 requires some examples which I will get to on another day.
#3. Yes, usually an ascending triangle pattern. If you look at a complete 5 min. chart for NVDA yesterday, between 12 and 3 it tried to break $42.50. The second attempt failed but the third attempt succeeded. In the process it carved out a series of higher lows which make up an ascending triangle.
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