X set up as a target trade to support on the daily as commodities cratered off the open. From the 15 min. chart below we see a weak opening range followed by WRB which tags support from yesterday's swing low. I was expecting a series of NRBs to form at the base, but price breached the base and continued lower. IMO, every flag pole, needs a flag (narrow range consolidation) before the pattern can continue in earnest. Finally, X printed a hammer reversal bar which was the beginning of the flag. Price retested the base and then carved out a NRIB NR7.I ignored S2 because as far as could tell, it didn't line up with any congestion or support area. I covered as price approached the target and round $ number $160.00.
My second X trade was a trendline breach on the 1 minute time frame. After retracing back up towards the declining 20 EMA on 15 min., X printed a shooting star. On the 1 min. chart price swooned into the trendline, consolidated briefly, before breaching and ascending the second leg down.
Failed flag pole and flag pattern on DRYS. S2 is significant here and dates back to the second week of June.
COG was an inverted C&H pattern. The key take away here is don't enter the B&B after a wide move into the base. If price doesn't consolidate prior to breaking out, it will after. If it breaks wide, it will most likely come back and retest the base. Either way, patience pays off with a better risk:reward.
7 comments:
thanks for the tip on COG. i always worry on a move into say R (neckline for BO) that involves a WRB. good patience there
QQQ,
Yeah, I much prefer to wait. I hate trades that fall into the dead zone shortly after entry.
Nice work Jamie, you make it look easy and it ain't.
Jamie,
Can you explain abit more on why you decided to close 1st trade on COG at that exit point? Using 38% fib retracement from low of 1.15pmET bar to base (more likely to be reversal) would have exit looking around 68.4.
Pls have a look at CNX's wild action on Wed. On the short side, would it be risky to enter on break of base at S3 (abt 104.8) at around 10am ET when it printed such a WRB on 1st 15min? Would you say the wider range a bar is, the more consolidation you expect?
I think the break of base at 11.50am ET (5min)is also another good setup.
How would you trade the reversal early afternoon? A break above 12.35pm ET hammer high on capitulation OR more confirmation is needed? Thanks
Jamie,
On DRYS what was your initial stop? It couldn't have been the high of the NR7 trigger bar as you would have been stopped out on the following bar.
The only thing I could think of is you used the high of the prior bar or you gave some leeway because of the distance of the 5ema from your trigger bar.
Thanks!
PDT,
Look at the lower timeframe, that kickback occurred before my entry was triggered. Once my order triggered, I used the kickback high as my stop.
YR,
Good question re. COG. I see you're a good reader. In the FDG post, I said if I have nothing else to key off of, I use the 38% Fib. retracement as my guide for booking profits. In the COG trade I had several things to key off of - support/congestion from the day before and the 50 SMA 15 min. Price does not take out the 50 MA lightly, it always puts up a fight and I had a good idea that COG would test the 50 and that a long drawn out bull/bear battle would ensue. Holding during that battle can test my patience, so I took the profit.
On CNX I like the 2nd bar better, it's an inverted hammer. Inverted hammers are bullish when they break up, but bearish when price breaks down. I wouldn't put a lot of money to work here as the setup is half baked, but it's a good opportunity to scale in.
The best entry is B&B 100.88. The longer price bases, the more likely it will break wide.
Reversals are tough, you need a solid base on the lower timeframe to confirm, but $96.00 looks good.
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