Both of these gappers are from my watch list. I was looking for easy setups given today's news. AKAM gave me a trader friendly base and break in the direction of the trend following Friday's bearish engulfing daily stick. R2 and the 38% Fib. extension of the previous day high to the ORL were in sync for this setup. After consolidating at support (R2), it carved out a bullish base and an inside bar, triggering a long for a full retracement back up to my initial entry level.
ACI was a little more subtle. Initially, it carved out a tweezer bottom at the ORL. The reversal lost momentum and couldn't close above the down sloping 5 period ema. I waited until price traded below the 62% Fib retracement of the ORL to the mid-morning swing high in order to ensure this was not going to form a C&H pattern long. I placed my stop just above the 50% retracement level to give it some room. Partial at R2 and cover balance when price starts to bounce above the round $ number $40.00. Eventually it printed a tweezer bottom reversal with a perfect green hammer, so I entered long.
Price does not fully extend to the 38% Fib. ext. level here because of significant daily support at $40.00.
13 comments:
jamie:
nice stuff.
i know you trade cup & handle pretty well.
some traders tell me that this pattern works good in a bullish case..
what about reverse cup/handle that we see quite often..in your opinion does it not typ break down ..or it is more likely to get support.thx
wanted ti clarify what i said before
" does reverse C/H work as well for a bearish case?
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.
There was a nice inverse c&h on the SPY ans ES futures from 9:30 to 1:30 on the 15min chart today. The price broke handle then promptly reversed. I watched it intending to go long due to a MACD divergence setup but the c&h looked too good so I did nothing.
pn
I took SOHU short today. It had a nice inverse C&H setup and almost hit its 100% fib extension.
Nice work Dave,
Looking at the 5 min. timeframe I see two C&H patterns in SOHU. A mini C&H that sets up at R2 and the bigger one that sets up at $42.00.
Ah yep, I forgot to mention I took the larger one on a break of 42.
Jamie,
Nice WL work. Check out gfig mf fcsx. Nice patterns, commodity brokers.
About how many stocks do you think you watch/browse on any given day?
For your trailing stops, do you manually adjust your stops are do you use some set amount?
Approx. 50-75 stocks, which is too many IMO. I want to reduce the number of stocks (currently 50) in my watch list.
I manually adjust my stops.
Jamie,
Many stocks gap down and close the gap on Mon. NDAQ is one of them. Do you think long on break of 1/5 after 2 inside bars is considered good entry in this case? The upper shadows on the 1st three bars prevented me from entering.
$MNX (mini nasdaq 100 index) on Monday. Is going short on break of 11.45ET 5 min inside bar (shooting star) a better entry than a break of the base at around 168.8?
Later in the p.m session, $MNX has a bullish moving average crossover and 2 NRIB setup on 5min at 2.55pm ET. It is showing upper shadows on the 3 bars. In such case, would still like the setup? If so, would you enter on break of 2.40pm 5 min bar high or the 2nd IB high?
Too many questions...if you have time, I would really like to hear what you think of my TBSI trade last Fri. It was a real trade and I need your sharp eyes to help see if there was anything wrong with the setup.
Thanks,
YR
YR,
I'm not seeing what you are seeing for NDAQ. I'll assume you mean 2/5 or break of $37.80 with a target of $38.50 and a $0.40 stop. Not a good R:R IMO.
The $MNX set up on 5 min. is awful. It's just a choppy mess and that's not a shooting star IMO. Looks like an inside bar. 15 min. IB is better but you have support from S1 just below. Volume patterns on index charts are hard to gauge. Not sure why you were attracted to this chart???
Where did you post TBSI trade details?
The best advice I can give you based on these setups and the TBSI 15 min. chart for Friday is to look for orderly chart patterns.
TBSI Thursday forms C&H. C&H fails on bar 2/15 Friday. Short the failure or wait umtil price tests the cup support.
Offsets are NG. Choppiness is NG. The LEH and GS charts are orderly. Map out S/R lines before taking the trade. If S/R too close to the entry point, wait for test of S/R.
IBs best for setups involving ORBO, handle in C&H and reversal following big move (usually in mid-afternoon), or sideways consolidation.
Thanks Jamie.
For NDAQ, I was referring to break of 1/5 high, i.e $37.7. I'm a little confused now as to why sometimes you take break of 1st IB while other times use the first of the 3 bars (ref the NRIBs revisited post). If I understand it correctly, only take break of 1st of the 3 bars if 2nd IB is bearish. Sorry I am abit cloudy on this
For $MNX, I just happened to see the pattern forming. Agree that lack of volume indication makes it hard to trade
I posted my TBSI trade details in your PCLN post. I traded the C&H on Thurs. Was there anything wrong with the setup or its just one of those trades that didn't work?
YR
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