I was watching VMW originally as a potential short, but after carving out a higher low, it started to make a compelling long setup especially on the 5 minute time frame below. The choppy looking 15 minute pattern is actually an ascending triangle on the lower time frame.A second entry was possible after it held the intra-day pivot and rising 20 ema as support, but I missed it. The first PP test resulted in a wide range red hammer (not low risk), but the second test was a smaller more bullish green hammer and a higher low as well.
RIMM gapped lower on the open after another analyst valuation downgrade. After a fast move lower into S2, it retraced back up to the ORL and started offsetting. It did eventually manage to close above the ORL, but couldn't hang on for long. I shorted a semi-triangle pattern which is easier to see on the 5 minute chart below.
It did not play out as planned, and by mid-afternoon, I was anticipating a stop out, but it eventually went my way. The one caveat I had going into the trade was the distance between price and the down sloping 20 period ema on the 15 minute time frame. Ideally these should be closer because we know that this type of trade will be slow until the morning pivot low is taken out. Allowing for a retest is easier with a tighter 20 ema. The point being that, any attempt to retrace back towards the 20 should not put our initial stop in peril.
10 comments:
I now know another way to read this type of RIMM trade.
Hope I remember to apply it.
Thanks.
Welcome Jerry
Jamie,
Nice RIMM trade 30" chart looks good too. Morning low is 3/15" bar, not ORL?
And thanks for the Briefing premkt wrap.
Does much the same rule about 20ma apply for long trade or they are less of a factor?
Jerry,
Yes, it applies to long trades as well. VMW, for example, pivoted off of support and came back for a retest which held the rising 20 ema.
Welcome BL,
Not sure I understand the question? Morning swing low is 3/15, followed by a retrace back to 15 min. ORL. At the time, I was thinking the ORL would hold as resistance on a closing basis because of the declining volume accompanying the retracement. However, price did close back up above the ORL on 10/15 but it turned into a bull trap.
Hi Jamie,
I noticed you enter on the break of breakout bar high for VMW. Why not 2 pennies above the resistance as you usually do? Thanks
YR
Ok and also hit 62 fib interday an reversed 9 10/15...all these things to remember: trendlines, fib-intra and interday, volume, candles! Thanks
Jamie,
Can you take a look at CVD 5 day 15min chart yesterday. Printed a shooting star at 12.15 bar with pivot point resistance at 86.75. Would you have shorted it on break of shooting star low or wait for it to close below 5EMA before entering? Thanks
YR,
Price rallies off of the higher low and tests the ORH. It's quite a wide move on the 5 minute and needs time to consolidate. I prefer when price consolidates prior to the BO rather than after. So I waited for confirmation.
Anon,
For CVD I would probably have shorted on the 1:00 stick as price took out those two NRBs because I like keying off of NR7 type bars. Still, I would have used the shooting star as my stop because NYSE stocks need wider stops than NAZ because of specialists intervention.
Good setup.
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