Are you starting to use 5/20 ema's more in all of your trading? I've followed 5/20 crossover systems before, but the whipsaws were murder. Maybe you're using them differently?
This also doesn't seem like a very low risk setup--What's the stop? Also, didn't the rounding bottom at 10:00 on 6/19 make for a low potential reward, offering potential support?
Thanks for answering my possibly inane questions :)
I'm using the 5/20 crossover as an early warning for weakness. There were other hints of weakness such two consecutive lower highs. Plus most of the stocks on my watch list were either weak or forming bearish rounded tops.
After the crossover, NTAP tested the 20 EMA and could not close above it. This was followed by a breach of the PP on a closing basis. There was only about 20 cents risk on my entry. The rounded bottom could have provided minor support, but I felt the market was about to rollover so I set my sights on a bigger run.
For the watch list, I usually calculate my pivot points from the 15 minute timeframe.
For example, on the NTAP chart Tuesday's high was a pivot point which matched the ORH on the gap down day - May 24, 2007.
The PP I traded from yesterday afternoon was the ORH on Tuesday and matched the noon swing high on the gap down day, again May 24th.
Significant PP will be observed as areas of support and resistance time and again. So it is important to keep the chart up-to-date until the stock breaks out to a new trading range.
Click on chart to enlarge
6 comments:
Jamie,
Are you starting to use 5/20 ema's more in all of your trading? I've followed 5/20 crossover systems before, but the whipsaws were murder. Maybe you're using them differently?
This also doesn't seem like a very low risk setup--What's the stop? Also, didn't the rounding bottom at 10:00 on 6/19 make for a low potential reward, offering potential support?
Thanks for answering my possibly inane questions :)
Prospectus,
I'm using the 5/20 crossover as an early warning for weakness. There were other hints of weakness such two consecutive lower highs. Plus most of the stocks on my watch list were either weak or forming bearish rounded tops.
After the crossover, NTAP tested the 20 EMA and could not close above it. This was followed by a breach of the PP on a closing basis. There was only about 20 cents risk on my entry. The rounded bottom could have provided minor support, but I felt the market was about to rollover so I set my sights on a bigger run.
jamie,
was your pp from a weekly bar from 9/8/06 and if not where did it come from.
thank you
bid
Bidmarket and Flatwallet,
For the watch list, I usually calculate my pivot points from the 15 minute timeframe.
For example, on the NTAP chart Tuesday's high was a pivot point which matched the ORH on the gap down day - May 24, 2007.
The PP I traded from yesterday afternoon was the ORH on Tuesday and matched the noon swing high on the gap down day, again May 24th.
Significant PP will be observed as areas of support and resistance time and again. So it is important to keep the chart up-to-date until the stock breaks out to a new trading range.
jamie,
on 5/24 my orh on 15m is 33.75 which looks higher than your pivot??????
Bidmarket,
My upper pivot = Tuesday High = $33.84 is in line with the ORH of $33.75.
My lower pivot = $32.92 which is in line with the May 24th noon swing high which equals $33.09.
I never expect them to line up to the penny as they are indicators not pure science ;)
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