CFC was a Briefing.com
gapper. After initial weakness, it started consolidating sideways, eventually carving out a flat, narrow base. I entered long after price closed above the base. I placed the Fib extension from the previous day low to the base. As expected price consolidated as it tested the
ORH. The consolidation was orderly and price moved higher. I took a partial at the 50% extension and closed the balance when price stalled at the 62% level.
RIO, a
gapper from the
WL, carved out an orderly base with NR7 trigger bar. I took a partial at the 38% Fib extension of the previous day low to the base as price was close to daily pivot. The next bar was a star so I tightened the stop.
CFC was a Briefing.com gapper. After initial weakness, it started consolidating sideways, eventually carving out a flat, narrow base. I entered long after price closed above the base. I placed the Fib extension from the previous day low to the base. As expected price consolidated as it tested the ORH. The consolidation was orderly and price moved higher. I took a partial at the 50% extension and closed the balance when price stalled at the 62% level.
RIO, a gapper from the WL, carved out an orderly base with NR7 trigger bar. I took a partial at the 38% Fib extension of the previous day low to the base as price was close to daily pivot. The next bar was a star so I tightened the stop.
16 comments:
I was following CFC today thinking it was a cup and handle. The 100% extension plotted from the morning low to base off the ORH was the same 17.48 price as your 62% extension.
Hi Jamie-
could you summarize your fib ext rules as far as where to set them at. I see sometimes you use the base, the OR, or swing highs or lows. Is there a resource you use such as a book or web page that explains it further? thanks
Great trade on CFC. I don't use Fib lines so please pardon the "rookie" question... Is there a reason why you placed it at the low from yesterday? Is there a rule about them or something?
Thanks,
-DT
Mike,
I see the wide cup and tiny handle pattern on the 5 min. chart. The end result is quite similar.
nice trading. kinda a shakeout there on Rio below the ORH, but CFC was a cadillac.
its amazing how often different fib ranges have a "confluence" of retracement areas.
Gary,
I will do a post on Fib placement soon as this comes up quite often.
tradethemove.com is the best resource for Fibonacci documentation.
In the meantime here are some basic rules for Fib. placement.
For gappers you can use Trader-X methodology which is placing the Fib. ext. from the previous day low to the ORH to calculate the expected extension.
However, if the ORH(L) is taken out prior to your entry then it becomes irrelevant, so it is best to replace the ORH(L) with the new base as I did with RIO.
With specific chart patterns such a C&H, I prefer Fib. placement on both ends of the pattern to calculate the measured move of the chart pattern, hence for a C&H, place Fibs from low of the cup to base of the handle to get your measured move - in theory it should extend 100%.
Hi Jamie,
Not meant to picky here, but I thought you usually enter on break of base +2cents. However on your CFC trade, you waited for the close instead. Just want to know why? Thanks
Pat
Thanks DT,
I'm following Trader-X methodology with respect to using the previous day high/low for gapper Fib. extensions. Also see comment above in response to Gary for some of my basic Fib. rules.
I don't know the exact rules, but I remember reading on the Trader-X blog that he experimented with various Fib. placements and in the end, this was the most consistently accurate.
Thanks QQQBall,
I guess the "confluence" of retracement areas comes from the sectors/markets.
Fair question Pat,
The reason I did that was because the BO occurred with just 2-3 minutes prior to the 15 min. candle being completed. I knew price would consolidate the break and I just waited to make sure the 15 min. bar would actually close above the base.
Thanks for the explanation, Jamie.
I'll check out that site as well.
Have a good weekend,
-DT
Good weekend to you too DT.
Hi Jamie,
You often exit when "price stalls". Could you please elaborate on what you look out to confirm that this is happening?
Thanks,
MD
MD,
It can be many different things. For example price sometimes stalls at round $ numbers or half $ numbers like $17.50.
In the case of CFC I saw a pivot area on the daily chart that was tagged three times on Sept 13, 25 and Oct 16th around $17.45. I was watching it on multiple timeframes and it felt like price was stalling at $17.50, probably due to the PP.
confluence - for example
im kinda referring to the times when the intraday 61.8% rertace will be almost the exact level of yesterday low-today's high 38% fibbo retrace.
QQQBall,
Thanks, I see what you mean.
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