AMZN gapped up on the open and carved out a flat base following the 15 minute OR. These flat base breakouts can be very powerful even though they are extremely boring to watch, stick after stick. I waited for price to break and then consolidate the break as can be seen on the 5 minute time frame below. I managed the trade on the 15 minute time frame and closed the position after three WRBs. I place my Fibonacci extension from the previous day low to the base as opposed to the ORH. Price reached the 62% Fib. extension on the third WRB.After extending 62%, AMZN retraced 38% on the move from the ORL. This is a normal retracement and usually means that the stock is preparing for the next leg up.
25 comments:
Nice move on AMZN - congrats.
Me, I watched that same AMZN set-up. But, because I thought it was being pumped-up in coordinated, pre-earnings, distributionitatius hypefest, I ignored the chart and failed to make lots of money on that long trade.
My consolation, I sold 100 and 120 strike calls which are looking good for tomorrow.
Ferde,
The options trade looks great for tomorrow. AMZN earnings and guidance fell short of whisper numbers.
Jamie, I was wondering if you could clarify something for me. When entering a trade using 15 min candlesticks (NRB's, HAMMERS, etc.), do you wait for the current candle to complete before you decide it's a viable candidate? For example, if a stock has gapped up and a NRB appears in what looks like a nice spot along the 5ema, but it hasn't completed and moved onto the next 15 min candle yet... do you go ahead and enter, or do you wait for the candle to print an official NRB, then enter on a break of its high on the next candle? Hopefully this isn't too confusing. I ask because lately I've been reviewing trades that didn't work later on and noticing that the perfect candle I entered on somehow turned out to eventually print a gravestone doji or something. Any help much appreciated. Thanks, Chance
Jamie,
I have two questions regarding your Amzn trade, and one general question. (1) why did you choose to draw your fib. extensions from the previous day's Low to the base as opposed to from prev. Low to the ORH? (2) how do you define a WRB (looks like to me (on 15 min. cht.) there are 4 WRBs between your entry (~95.25) and your exit (~98.85 I'm guessing); and on the 5 min. cht. I count 5 or 6 WRBs.
General question: is there a book (or books) you can recommend for the concepts of NRBs, WRBs, and PPs.
Thanks for your excellent charts and explanations; they are very much appreciated.
JL
Jamie,
Your patience paid off handsomely for this trade :)
You placed your Fibonacci extension from the previous day low to the base as opposed to the ORH. As this method always applied to flat bases only?
Take a look at NFLX. Carved out a base just before lunch time. Would a break of above 9th bar doji high (15min) be a good spot to go long?
YR
nice trading agin.
Jamie,
Watched out and gott distracted as entered ZRAN 16/15" b/e as didn't go anywhere and boring. ALOT of >$70 naz stocks moved out: amzn micc isrg fslr aapl on the 15 and 30 min charts. Looks to me like these hefty priced stocks are a good read. Do you trade the more pricy stocks?
Jamie,
Did you catch PCP...what a reversal!
jamie
I was checking out the TG blog and i saw the chart... i thought it looks like Jamie's work. So what i found out at the end of the post... it ofcourse is Jamie.....
Good to see you everywhere.... you have taught me a lot....keep up the good work.. keep those educational post coming man...hope to meet you someday when i get out of school...
cheers..
Chancee,
Based on what you describe, I would say you should wait for the bar to complete itself. The safest setup is if the previous bar or your trigger bar confirms your setup. So for longs, ideally you want the previous bar to close near its highs, and vice versa for shorts. I also like to trade a base breakout, so look for resistance from those fakeout candles and try to entry after price has cleared resistance.
Nice. Thanks for you help.
Hi JL,
Thanks for the kind words.
1. The easiest way to place Fibs is the Trader-X way using the ORH. But in this case, the base was so long and so flat that it became the primary BO point. I often do this for C&H patterns as well. It works well because, otherwise if you wait for the ORH to be taken out, your stop will be so wide that it will require a reduced share size.
2. I like to plan an exit after three WRBs because after 3, price is usually far extended from the 5 period ema and thus likely to retrace. I prefer three WRBs where the real bodies don't overlap too much and that's why I said three for the AMZN trade not counting the overlap where price paused to consolidate.
Sorry, have not read any books on WRB, NRB, NR7, or PP. But let know if you find one.
YR,
Re: Fib placement, see comment above.
NFLX - Base is $25.25 which is the high of bars 2,3 and 6. B&B at 2:15.
All of that NR trading in between is lunch time dead zone. I personally don't like to nurse a trade that's trading sideways for such a long time. However, if you go to a lower timeframe you might find a base within the wider base if you want to get a head start.
Thanks QQQBall
Thanks Vivek
BL, Check out my post on Trading Goddess blog tonight entitled Buy the rumor, Sell the news. All those high priced stocks that rallied like it's 1999, are fading AH.
The ZRAN base is nice, just happened to be the wrong sector. SOX is the only tech sector in the red today.
The quality of the base is a big plus in the size of the move. Also volume which is more likely to be higher in the big name stocks that everybody's chasing.
BL,
Did not catch PCP - had to be traded on 5 min.
nice site!
do you like BA on the dip?
www.BuyOnTheDip.com
cheers!
BA looks like a double top. I'm a bear.
Thanks for the help Jamie!
JL
http://www.amazon.com/Street-Smarts-Probability-Short-Term-Strategies/dp/0965046109
http://www.amazon.com/Trading-Short-Patterns-Opening-Breakout/dp/0934380171/ref=pd_bbs_1/103-1150106-2719015?ie=UTF8&s=books&qid=1193229715&sr=1-1
linda raschke and tony crabel are good references for nrb/volatility expansion/contraction.
crack
I have a question. Who has similar blogs like yours? I checked Trader - X, but he is not updating his site anymore. I will appreciate if you can give me suggestions on other blogs which have the same trading styly like yours. Thank you.
TK,
Bloggers with similar trading styles and currently posting trades:
OONR7, MaoXian, How I day Trade, StockTickr.
I'm sure there are tons more. Let me know if you find more that I can add to my blogroll.
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Thanks for info jamie.
Thanks Jamie. Re long base, from your experience, how many bars do you consider long?
As for NR trading during lunch time zone, are you saying its better not to take any trades during lunch time if NR bar trigger?
Clearly, I still have problems identifying the start of base ;)
YR
YR,
It's hard to define a long base, but anything that drags on over an hour is starting to get long.
No, I'm not saying not to trade lunch time, I'm defining a trigger differently than you. My trigger needs something more than just a NRB. You know the usual things B&B, inside bars on declining volume consistent with the established trend, or chart patter such as C&H.
At first it's very hard to clearly identify a base, but don't forget the all important PPs. ;)
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