SID was a trading list short on last night's
HCPG newsletter. The short didn't pan out but it set up a perfect inside bar at the base of resistance for a nice, low risk long. The inside bar in the shadow of the previous bar ie. no overlapping bodies is one of my favorites because it shows how orderly the setup is. The BA gapper set up in the same fashion (inside bars with no overlapping bodies). I took a partial as price approached R2 just prior to the FOMC policy statement and tightened the stop, but SID didn't care about FOMC. Sweet!
Took a low risk inside bar setup on AAPL 5 minute. It quickly took out resistance but couldn't BO of the next level base. After three attempts, I dumped it.
SID was a trading list short on last night's HCPG newsletter. The short didn't pan out but it set up a perfect inside bar at the base of resistance for a nice, low risk long. The inside bar in the shadow of the previous bar ie. no overlapping bodies is one of my favorites because it shows how orderly the setup is. The BA gapper set up in the same fashion (inside bars with no overlapping bodies). I took a partial as price approached R2 just prior to the FOMC policy statement and tightened the stop, but SID didn't care about FOMC. Sweet!
Took a low risk inside bar setup on AAPL 5 minute. It quickly took out resistance but couldn't BO of the next level base. After three attempts, I dumped it.
7 comments:
For these IB plays do put your stop at the bottom of the IB or the outer bar?
This question pertains to AAPL. Did you wait till a break of the outside bar before entering? Is this generally what you do? Would there be any reason to wait till a break of the morning swing high (in this case its the ORH) or it really doesn't matter?
Thanks.
PDT,
It depends on how well the pattern has formed. The AAPL setup was not well formed, so I used the outside bar. The SID base was perfectly formed. If you look at the 5 min. timeframe, you see that after price pivots into resistance, it forms a shallow rounded base. That formation is pure gold. So you can use the low of the inside bar or the low of the rounded base as your stop.
"So you can use the low of the inside bar or the low of the rounded base as your stop." - You mean the same thing, just on different timeframes right? ie the IB on the 15 is the rounded base on the 5.
Would you ever consider with a nice setup like SID using the low of the 9:00am NR7 bar as a stop, or is that just overkill?
PDT,
You lost me there. We must be in different time zones. I'll assume you mean 12:00 EST NR7 on 15 min. Overkill indeed. That little handle on the 5 min. is all you need, but to be safe use the outside bar plus a few pennies.
The thing with base and break at resistance is that if it doesn't break, it could be a head fake or failure which will result in a reversal. I don't want to stay in a trade that reverses back down to support.
Wait, now I'm confused.
What I actually meant instead of the small of the base on the 5-min chart (which is also the IB on the 15-min chart) could you use the NR7 bar (1:00pm) on the 5-min timeframe as a stop.
NR7 1:00pm bar has a low of $42.52. The low of the little rounded base looks like its low is $42.38 at 12:40pm.
What I meant was if you used that NR7 bar thus having a tighter stop, would that be overkill.
Sorry for the confusion.
PDT,
Most BOs come back to retest the base and that tiny bar is just not allowing for any wiggle room.
Makes sense. Im just getting greedy :)
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