From the Briefing.com gapper list, SEED formed a Cup & Handle pattern in early afternoon. It was breaking out just as I got back to the chart. Since the BO bar was WR, I decided to wait for a retest, as these WRBs at the BO point usually consolidate the break before extending. I exited as price approached the 100% Fibonacci extension of the ORL to the base of the C&H pattern. 100% is a normal extension for the C&H pattern, plus I had my three WRBs.
The best entry would have been a break of the 2 NR inside bars on low volume (NR7) just prior to move back up to the base. However, sometimes it is difficult to identify the C&H pattern before the handle completes itself.
12 comments:
I wanted to chase it as it zip past my limit order, but hesitated it. Can't have'em all.
Jerry,
I didn't want to chase it either, that's why I waited for the retest. On the 5 min. it formed what was shaping up to be a rising three methods candlestick continuation pattern right on the baseline.
Hi Jamie,
POT had a failed breakout of PP ($112.68) formed on 2/10 & 9/10 on 15min chart. Other than the doji prior to 11.30ET bar, I wonder what else went wrong?
COST gapped up and consolidated with lots of doji. The 12.15 bar (15min) was bullish engulfing with higher volume. Would you have taken this trade on break of bullish engulfing bar as there is support from 5EMA, despite the series of doji?
VMW, one of your plays. Consolidated today at about $104, pulled back to find support from 20EMA & also base of diagonal uptrend channel (formed from last Fri onwards). Better to go long on break of the hammer-like bar (1.30, 15min) or wait for break of PP $104.15? Thanks
YR
Sorry Jamie,
One last one, please bear with me. 1.15 bar (15 min) found support at previous day PP. It then went on to form a inverted hammer, which was confirmed by the 1.45 bar. Would an entry on break of the 1.45 bar high be good enough or better to wait for break of the inverted hammer's high?
At this point, I roughly know the zone for an entry, but needs some polish to perfect the exact point, hope you don' t mind my endless questions :)
YR
YR,
POT - huge move yesterday - stock is exhausted.
COST - No, a flat base BO has to cover all of it's shadows IMO. I was watching this one, holding out for a C&H. Didn't happen today - maybe tomorrow.
VMW - BO. A real hammer has a lower shadow that is at least twice the length of the real body. I don't want to get overly picky, but that candle that you describe as hammer-like is just a star with upper and lower shadows, not a reversal bar.
Hammers or real hammers are solid reversal patterns, but not always great entry points because the stop is so wide. A perfect base like VMW, if it offers a NRB as a trigger bar, is ideal.
YR,
No problem re: questions, but on the last one, I'm not sure which stock you are referring to.
Thanks Jamie.
I was referring to DRYS on the last one.
For COST, when you say cover all its shadows, are you saying it has to break the 6th bar high for entry?
YR
YR,
Yes re: COST - 6th bar high and notice how that level held as support on the afternoon dip.
I'll look at DRYS tonight and get back to you.
YR,
With respect to DRYS, a close above the real body of an inverted hammer is confirmation. Secondly, that bar is inside so more reason to go long on break of the 1:45 bar.
Another way to confirm is by looking at 1 minute timeframe. The slope of the 50 SMA on a 1 minute chart should align with your trade strategy. After a high volume retracement, you want to wait until the 50 SMA changes over from downsloping. Two things, wait for price to regain 50 SMA on 1 min. and wait until the 50 SMA at least flattens out and looks ready to start to move up. In this case you had convergence of 20/50 MA plus price was trading above 50 SMA. So it confirms the trade strategy. I used this technique to confirm my CELG long entry today.
Great, thanks for this 50SMA on 1min tip!
YR
Jamie ,
how did you place Fibonacci high point prior to stock has reached 11.93, I understand that the start point for Fibonacci is in a high OR point , but how can you apply the end point ?
thanx
Kogi
Hi Kogi,
For gappers we generally run the Fib. extension lines from the previous day low to the ORH to establish targets.
In the case of SEED, because it forms a cup & handle pattern, I run my Fib lines from the swing low (which happens to be the ORL) to the base of the C&H which is higher than the ORH because of the swing high. I do it this way because, on a measured move basis, a successful C&H breakout is supposed to extend the full length of the pattern, in other words 100%.
Post a Comment