I added PCLN to my watch list after YR mentioned it in the comments in mid February re: its earnings gap. Today it carved out a NRIB - NR7 at the base of R1 and setup a perfect momo move. I took a partial after it approached and retreated from $122.00. I moved my stop under the spinning top once the candle was concluded and was stopped out. I was expecting a deeper retracement, but a while later it took out the HOD and set up another quick scalp.The 5 minute chart of the initial trade below.
AKNS was a solar gapper from the Briefing.com list. I set a buy stop above the ORH after the second bar printed inside. I was expecting the third bar to be an IB as well, but just seconds before it closed it broke out. I usually use the previous bar low as my stop, but in this case I used the BO bar. The target was the 38% Fib. extension of the previous day low to the ORH. This level lined up with resistance on the daily.
16 comments:
Nice trades, with AKNS, could you talk about how you pick Fib. targets a bit? As in choosing 23/38/34/50/100 etc. If I could get your opinion on CAT today and how you would set a target that would be great. It seemed to have broken through resistance at 75 and was hoping it would go to the 38% fib level, but the stock didn't break its morning highs. Thanks!
Chartguy,
The Fib. levels I use are the standard settings available in the charting software. I believe they are in line with Fibonacci theory.
Daily resistance lines up fairly closely with the 38% Fib. extension level for CAT. I don't know why it failed to extend fully except perhaps because it was exhausted after such a big run yesterday.
Hey Jamie,
Ok, here's something I've been wondering -
When you trade off a NRIB on the 15-minute time frame it represents a low volume consolidation that will hopefully be a pause in a larger move. After looking at the traditional TA texts do you think this consolidation should represent some type of shape (des/asc/sym triangle, rectangle, flag) on a lower time frame? Or do you think the shape on a lower time frame is unimportant?
Jonathan,
Good point. Yesterday's JOYG series of NRBs looks like a mini C&H pattern on the 3 minute timeframe. I guess that sometimes they are ascending triangles and other times symmetrical. I will have to pay more attention and point that out in the future.
Thanks for the reply, I probably didn't word my question too well. I understand how to draw/find fib. levels. What I have trouble with is deciding before I enter a stock, what Fib. target level I should use. Generally 38% is a good target, but sometimes I see 50%/100% used and was wondering if you had any criteria to pick one level over another.
Chartguy,
38% Fib. ext. is the prelim. target for a typical gapper which gaps above/below the previous day high/low.
If the market is really strong in your direction, you might want to partial out and hold out for more. If a stock trades in virgin territory, it has better chance of exceeding 38% because there's no S/R.
Chart pattern extensions are based on measured moves typical for the pattern. eg. C&H is 100%, triangles also 100% measured from the apex...etc.
Just curious if you traded PCLN off the 15 or the 5 min chart. Did you noticed the NR7 IB on the 15 min chart and then trade off the 5, or did you just include the 5 for the hell of it?
Also what made you chose $122 as an exit for this trade? Thanks in advance!
Anon,
The execution was based on the 15 min. but I always have several timeframes on my screen at the same time so I'm watching both at the same time. Including the 5 min. chart here for my memory.
I spotted it on 2/15 also an inside bar but too far away from 5 ema. I stuck with it until it gave me a really good opp.
My target was $124-125, but at 122 it felt stretched so I took some money off. Expected a deeper retracement after such a momo move and that's why I took the stop out.
Glad you made money on PCLN!
I've picked up alot of tips from this post and the last, especially your comments. Thank you.
I recall you only adjust your stops after it re-tested breakout point. For AKNS, did you adjust your stop to breakeven upon completion of 6/15 or 7/15 bar?
Meanwhile, you maybe interested to take a look at the 3 month daily chart of WFR. It seems to be forming C&H on daily and close to breaking out.
YR
Would you mind explaining your entry on PCLN.
When exactly do you place your buy stop? Do you do it while the 4th 15 min bar (NR7 ) is forming or do you wait till it is completed? If you do it while it is forming how do you know if it will complete as NR7? If you waited till after it formed it looks like you would have missed your chance to buy as the next bar opened slightly above R1.
Was your entry R1 or the high of the NR7 bar?
I agree that these comments are VERY helpful!!!
YR,
That's correct, after 6/15 move stop to BE.
WFR looks like C&H on daily. Looks like one of the better clean energy plays. Thanks for pointing it out.
Anon,
I start setting up by stop order in last minutes of the 15 min. bar. In the case of PCLN, I want to get long only after R1 is taken out, so I set my buy stop order a few pennies above that level.
Sometimes the entry goes through before the bar completes itself as was the case with AKNS. For NASDAQ stocks, I also watch the level II to make sure that there is market depth to support my entry price.
It's easier to do when the spread is tight. If spread is too wide , I sometimes enter early. But if you are a fairly new trader, it is best to avoid wide spreads.
PCLN was not a wide spread so I waited until price broke above R1.
Always set your buy order above the trigger. I usually use two ticks as a buffer to ensure that buyers bid the price higher as opposed buyers hitting the ask.
Edit last comment:
2 ticks for higher priced stocks, but for a $6.00 stock like AKNS I use 1 tick because each penny is important.
Thanks Jamie. Would you take WFR as a swing or day trade?
I had a failed trade on TBSI C&H on Thurs. I entered at 1.35pm ET 5 min bar as it breaks 2 pennies above $31. I thought it was a pretty good setup: Recapture of 20EMA on 15min, no pivot points nearby, lower volume on handle. I used $30.4 (near 5 min 20EMA) as the stop as the previous 15min bar low stop is too wide, and trigger bar low is too tight. Right after entry, it pulled back in quite an orderly fashion. I got stopped out. I thought it is forming another C&H. Will watch this again today. But I just wonder if there is anything wrong with my setup or trade management?
Thanks,
YR
YR,
I would not swing long in this market, and especially not after a WRB like WFR yesterday.
WFR testing $85.00 in pre-market
YR, I will look at TBSI over the weekend.
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