ESRX from the WL is good for C&H patterns lately. This is not a perfect C&H because the handle forms above the base of the rim and the volume pattern is not great, but the IB followed by the NRB was too good to pass up.
I took a partial when the third BO bar closed just under the 100% Fib extension from the low of the cup to the base of the handle. I closed the balance as price tagged the blue resistance line.
ESRX did not lose its composure after the Fed rate cut. It was orderly and seemed to be setting up for another move so I stuck with it.
13 comments:
On the 15 min chart can you explain how you consider that to be a C&H? I really do not see it. I can see the cup (kind of.
What kind of pattern is seen on the 5 min chart? Some sort of triangle?
What kind of stop do you use in this setup.
Thank you Jamie
nice job, that was a low risk play.
I played GS..but being a novice took my profit too soon..
about C/H yesterday
u wrote:
""....Anon,
I can't be sure because I have little experience with the inverse C&H pattern. However, I did trade ESRX March 7th (posted March 9th) with excellent results and JOYG on March 10th with less than expected extension but still profitable.
Over time I will get a better idea if it is equally powerful on the short side..."".
But you have mentioned before, you look for 3rd time support break that basically has reverse C/H theme behind it.can you elaborate..thx.
Anon,
I did explain in the post why the ESRX C&H pattern is imperfect, however, I traded as a measured move based on that pattern because that's what I perceived it to be.
The triangle/pennant pattern is a good way to get back into a trade post consolidation.
I use the previous bar low as my initial stop. After the first consolidation or retest, I start moving stop below each WRB in the direction of the trade.
Significant support/resistance levels usually take several tests before breaking through. I find that the the third test is usually the critical test. In the context of a perfectly aligned C&H pattern the OR is the first test, the completion of the cup would be the second test and the completion of the handle would be the third test. Of course, it's easier to see on a lower timeframe. Today's chart would be excluded because it's not perfectly aligned as noted in the post.
Jamie,
There is a nice C&H in GS this morning on 5min chart. It hit 100% extension and more. But I want to be more precise in my entry. In your opinion, in C&H cases when the base don't line up perfectly, which do you take as the trigger point?
-the highest bar (5/5 in GS)
OR
-round number ($165)
OR
-the price where stock keeps touching the most (there isn't any in GS)
Also, would you be bothered by the series of doji and upper shadows from 5th-8th bar and require a close above the trigger price for confirmation instead of a break only?
Likewise, LEH also a nice C&H this morning on 5 min. On the 15min, the 2nd and 3rd bars are also NRIB. Since the 2nd NRIB is red/bearish, I presume it would be better to wait for break of C&H base than to go long on break of 2nd NRIB high?
Thanks,
YR
YR,
In the case of GS 5 min C&H, $165.00 and price tagged most often are the same = ORH 7 and 8th bars. No confirmation required here the pattern is perfect but let it get slightly above $165 before jumping in. Was that a bad tick on 16/5, if not, that's a potential stop out.
I traded LEH today - break of 2/15. Looks better on 5 min. but C&H is a stretch. You want to get in after price crosses above R1 in close proximity to 5 ema. Worked on 5 min. but ema was far away on 15 min. I took a chance.
Harvey Walsh traded these two stocks today. Check out his video from my blog links.
It looks like you were going long today, and for good reason. But on a bearish day do you think you would have traded MDRX break of ORL at 10/15. It seems like breakouts from rounded tops have a high probability of success and the ninth candle is a nice inverted hammer.
Thanks.
Rick,
Rounded tops are bearish (supply > demand) and rounded bottoms are bullish (demand > supply). A very bearish setup in MDRX with no support until $10.00 where I would take a partial.
Ok cool. I've been seeing these lately, I'm going to call this pattern an inverted Nike Swoosh :)
Thanks Jamie.
Nope, I didn't see any bad ticks on GS. I'm using prophet charts.
For LEH, why did you use break of 2/15 instead of break of ORH?
I will check out the video, looks cool..
YR
YR,
I used break of 2/15 because 2 is green and I'm going long. Also, the break of $38.00 is the real test and I'm using the first inside bar as my entry and stop - confirmed on the lower (5 min.) timeframe. If you have to pick a spot it has to be meaningful, this was the most meaningful to me, at least it made sense yesterday. ;)
YR,
TBSI trade C&H from last Thursday. Price ran up $1.50 into the base, so it needs time to consolidate after such a big run. That's the reason it failed. You might want to look for C&H patterns with narrower handles.
Don't trade a stock that has a wide run into a base. Wait until it closes above the base for confirmation. Even then it will likely consolidate before making another big move.
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