I missed most of the morning session and I had another appointment scheduled at 4:00 EST, so I didn't get to my trading desk until 11:30. I wasn't expecting to get much trading done today, so I was really surprised to see how well the markets took off in the afternoon.The first chart is the daily timeframe for AMGN. The last two previous sessions carved out inverted hammers at PP support (yesterday's bar was also NR7) so this was a stock I wanted to focus on today.
Around midday, it set up a bullish shallow rounded base on the 5 minute timeframe (flat B&B with NR7 on 15 min.). I entered a dummy long on the break of the mini base. I closed the position after it took out R2 and started pulling back. I set an alert just above R2 because I wanted to see if it would hold as support and prompt a second leg up.
Sure enough, AMGN based briefly at R2 and then bounced so I took a second entry. Missed the last wave because I had to close off early.
CAL was another watch list stock I wanted to focus on today because yesterday it closed on its trendline. After breaking out of a bullish, rounded base and retesting the base as support, CAL set up a dummy long on the 5 minute timeframe.
4 comments:
Hi Jamie,
I have a general question about 5 and 15 minutes ORH or ORL break.
Is it necessary to have a B&B pattern b4 u enter or is it possible to take basically every break of the ORB?
For example from today - SHFL: It gapped down on earnings and the 12th candle is breaking under the low of the 1st candle which was the ORL (5min). There is no base before but the momentum drags the stock down further.
Valid trade or not? TIA
Hi Jamie,
Would you consider taking an entry on break of $31.44 (high of 11.50ET bar) for CAL? An entry there would be similar to your AMGN first entry.
Thanks for sharing these great trades!
YR
Anon,
I would not recommend trading just any break of the ORH/L. You have to have a legitimate reason for every trade otherwise the it's just a crap shoot. In the case SHFL - 1 minute timeframe that I believe you are looking at, the first bar is a hammer = potential reversal. Price does reverse and moves higher towards downsloping 5 ema. Bar 4 is a green hammer, bar 5 is a gravestone doji and bar 6 is bearish bringing price back down to low of bar 4. Those three bars constitute a bearish reversal in candlestick terms and you can short anytime after that. I like B&B so I would wait for a break of the base at $13.96 - base is the low of bar 2 and 3 and close of bar 1. Keep in mind that price often consolidates as it tests the ORL. If it stalls, take some profit and move stop on balance to BE.
I would not short at bar 12. Price is too far gone. Watch for volume spikes as these foreshadow the end of the move.
Also price tends to consolidate at round $ numbers and half dollar numbers. These are also areas where you can take partial profits.
Hi YR,
The AMGN base is quite long and price has carved out some higher lows before my entry. The CAL entry under consideration is a long entry off of the lowest lows in the retracement from the mid morning swing high. I would not take it as does not meet my criteria, but I have no problem entering on the 12:15 bar after price crosses above the MAs and after a higher low.
The two hammer like bars might be considered a tweezer bottom reversal pattern, but I still like the extra bar as confirmation.
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