Monday, October 27, 2008

Lame Rally Leads to late Day Sell-Off

A low volume rally tested Friday's range highs and reversed setting up a short trade.

Took a partial as price reversed after taking out P. Stopped out on false base breakout. Re-entered short as price broke out of a bear flag pattern. Accelerated swoon into the close.

Tried this long setup on ABX again as it set up at the same price as Friday. After retesting Friday's range highs it started to feel like it was going to roll over.

6 comments:

Rick said...

Good job battling it out. I can't really see a bear flag in the NQ and the volume picked up before the trendline break instead of contracting. Was this more of an instinctive trade after all the afternoon selloffs we've been having lately?

Jamie said...

Rick,

The volume didn't contract I suspect because of programmed selling. The formation was good though. Maybe a bit of a revenge trade after getting stopped out on a head fake. And yes, instinct as well.

yr said...

Hi Jamie,
Would you see an entry at around 10.50ET 5 min chart on RIMM today as good for going long? It formed a base and support around pivot and also 50% fib level of previous day low to today's ORH. Nothing spectacular abt volume though. Thanks for your thoughts.

YR

Jamie said...

YR,

Yes, but fib retracement would be Friday's trading range because no gap. Sets up a nice mini base in the same spot as Friday round 2:00 EST.

yr said...

thanks Jamie. So the overhead 5 & 20 EMA and 50SMA nearby on 15min chart is not a big issue in this case? When does MA become an issue?

Jamie said...

YR,

The slope of the MAs determine if and to what degree they are threatening. In the case of RIMM, at the time of entry, the slope was very subtle and almost flattening which is far less threatening that a steep curve.