Gapper Dummy Trade of the Day - Alpha Natural Resources, Inc. (Public, NYSE:ANR)

ANR gapped up on the open and quickly rose to the top of my Watch List in terms of % gain. I missed the open, so by the time I got back, it was already printing some red. As it retraced, I saw an orderly pullback towards the rising 5 period EMA. By orderly I mean small, tight, red candles with no overlapping bodies on declining volume (retracement candles should be smaller than the trend candles otherwise it might be a reversal).

I was watching it on the lower time frames as well. On the 1 min. chart, I look for price to carve out a higher low to indicate that the retracement is over. Then I look for a base. The circles on the chart below mark areas where price pivots and changes direction. This is the base and as soon as I identify a higher low, I prepare to enter if it makes sense on the 15 minute time frame above. I use the previous bar low on the 15 min. as my initial stop.

As you can see everything gelled. Price retraced 50 % of the move from the ORL to the swing high on declining volume. The 5 period ema and price came together at that level.

Today was a down day for the market with most of the WL printing red ink so I wasn't looking for a home run, just a retest of the morning swing high. That target was achieved very quickly. I was hoping for a C&H pattern to develop later on, but that fell through around 2:00.