The first chart is a daily of CROX. The key take aways here are the NRIB at the base of pivot point resistance. The PP is derived from price action in early November after the wide earnings gap. Price pivoted off the blue line on day two following earnings and then price pivoted into the resistance of the blue line on day four. After a month of consolidation we came back to test the PP on Tuesday, followed by a NRIB at the point of convergence of the 5/20 MAs on Wednesday.Yesterday's OR tested the daily pivot (blue line). I watched it closely until shortly after 11:00, hoping that price would find support at the rising 5 period ema. After lunch, I came back to it and all of a sudden things starting looking optimistic again. Long on a break of the PP base after NRIB (NR7). It broke out on an uptick in volume and paused shortly after at the 38% Fib. extension of the LOD (low of the day) to the base (blue line). The consolidation was orderly on declining volume. Once it took out the 38% level, it went vertical on accelerating volume. Sweet.
8 comments:
Beautiful!!!
I discovered your blog (and trader mike and X) a few weeks ago and I am reading everything like crazy; it is truly a wealth of trading wisdom and common sense. Thank you, thank you, thank you.
Reg this trade: I assume your entry was a few cents above the 43.83 line. Was your stop the low of the previous candle (~43.50)?
Cheers!
Thanks Anarco,
Yes, I always place buy stop and sell stop orders at least 2 cents above or below.
Great job Jamie once again. I study all of your work in great detail. Keep up the great trades!
Thanks Andrew
Great trade Jamie! Started reading your blog a few days ago and I am extremely impressed of the quality of the content!
Jamie, how much credence do you put on the ema' you have on this chart? Would you have gotten out of the position if the consolidation by the 38% extension violated the 5 period ema?
Cheers!
Thanks Michael,
I usually allow for a retest of the base. However, since CROX consolidated prior to the BO, I would expect it to hold the 5 period ema on a closing basis. If it doesn't, I have to start thinking about the possibility of scratching the trade.
Generally speaking, in a normal sideways consolidation, the first consolidation bar is the widest. Any price movement that dips more than a few cents below the first consolidation bar is a sign of a possible retracement. At that point I have to decide if I want to hold while the stock gives back 38%.
Jamie, thanks for the clarification! What are the other ema values that you are using on this chart? If I may be so bold to ask, how many trades do you usually put on a day, and how many turn out like this? It seems every trade you put on is a money-maker!
Cheers!
Michael,
The blue line is the 20 ema and the green is the 50 sma. I also sometimes plot the 200 sma in red. I use ema on the shorter MAs and the SMA on the longer ones.
Not trading much lately, just 1-2 trades per day and sometimes none at all. I'm being very selective and I have a projects on the side, so I'm not always able to execute when I want to.
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