My third consecutive RIMM trade: the key take away here is yesterday's midday pivot holds as resistance as RIMM retests in early trade. Also notice that the wide opening range is not supported by the level of volume needed to build momentum. The seventh bar is NR7, followed by a shooting star - an invitation to short as price falls under the converging 5/20 MAs. My expectation on these types of contraction/expansion trades is 3 WRBs, so this one played out perfectly as price swooned, on accelerating volume, into S2 (red line).
Friday's breach of the rising wedge proved to be decidedly bearish indeed. Today's low was psychologically significant ($100.00), as well as technically significant. Not sure how this will play out, but if we get some NRIBs at the base of support, we might be setting up for more downside. The volume on this three day move shows that the bears own it. Let's see if the bulls will come out and play defense.
14 comments:
Poetry! Congrats.
Jamie,
When I looked at the 3 dojis and hanging man before the NR7, it showed good sign of resistance. And the shooting star with volume confirmed the reversal are aboout to happened.
Here is the question, the volume decreased as 2rd - 7th bar trade sort of sideway about ORH. If it was a green bar that followed the 7th bar(NR7), it may still have a minor chance for a gap fade. Of course it got to break 5th bar high in good fashion in order to consider it.
But what I don't get is when you said "wide opening range is not supported by the level of volume needed to build momentum".
What kind of volume would be right? High volume before NR7?
Thanks Ferde
I tried to short the break of the low of the 22nd bar. Not an ideal set up so took a very small position. Got out with a scratch. Did better with CMGI...see blog for details.
Formerly ADD Trader
http://addtrader.wordpress.com
Hi Jamie,
Did you set a system order to buy on break of the blue line (slightly up)? On the 5 min chart, the movement is pretty fast.
YR
Jerry,
The OR doesn't have enough volume. Both the first and second bars close strong, but volume is just mediocre, so I can't help thinking the test of yesterday's base is going to fail. I agree that as long as price traded above the MAs, there was a chance for the bulls, however, NR7 trades in lower half of trading range and shooting star prints a lower high, confirming the bearish setup.
Good one ADD!
YR,
I used a sell stop order below NR7.
That's......
Formerly ADD Trader...
LOL!
Formerly ADD Trader
I get it FAT. LOL
Monday's pivot high was also a .618 retracement of the LOD back towards the HOD at that point.
Andrew.
Good point Andrew
I see that someone wanted to be the first one to post on the new site. It's good. We've got 19 signed up, lets hope that even a handful will post good stuff regularly. Thanks Jamie.
Hey LP,
I had no idea when I started the post, that I would be baptizing the new blog. But, first is good.
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