ESRX from the watch list, formed an inverted C&H pattern around 1:00 EST. The pattern became interesting during lunch when ESRX carved out 2 NRIBs on declining volume. This was during the handle formation which eventually formed a shallow, inverted, rounded base. The key success factor in the C&H pattern is price and volume contraction during the handle formation. Also note that the 2nd IB is NR7.Sell stop on a break of the C&H base. Partial at 100% Fib. extension from the high of the cup to the base. Friday was a race to the bottom so I decided to hold some to see if I could get more than the typical measured move for this pattern. ESRX extended to 138% before staging a 62% retracement of the last leg down.
4 comments:
Great trade, could you talk a bit more about how you decide to exit? On the 5min chart, I do see more volume coming in, but was wondering if that is what triggered your exit. I feel like that is what I need to work on.
Chartguy,
That's exactly right. The last volume spike into the 1.38% fib. ext. felt like capitulation. Since capitulations can result if fast moves in the opposite direction, it's best to exit quickly.
jamie:
i am using tradeideas for 2 months and yet to see much benefit from it..
i see that you primarily watch your watch list on it..things like NR/ day's low i guess..but there a lots of false signal that makes the whole thing rather ineffective..i will use it for another few months to see if there is any improvement for me..
Anon,
I agree that there a lot of meaningless signals, which is the same for all scanners. I continue to experiment with combinations of signals and filters to try to find meaningful scans that don't overwhelm with useless flags.
But I'm still finding that scanning the watch list and the focus gapper list is easier than scanning the universe.
So far not able to filter for narrow range inside bars. I just keep checking the NR7 flags and once in a while find a gem.
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