Thursday, December 04, 2008

Today's Trades - Mélange of Setups

X and CNQ were two B&B setups that I had scoped out last night. I prefer to have a clean setup with an inside bar at the base of the whole $ number, but we have to take what we get and work around it. X breached the base on the OR. The bar was bullish but left a long upper shadow so I had to wait until price could move above the shadow to be sure.

The details are highlighted on the 1 minute chart below. I took a partial on a shooting star and exit on a breach of the H&S top. I was hoping for a possible ambush trade after a 62% retrace of the thrust, but it never panned out.

CNQ was my second pick for a B&B trade, but oil/energy was just too weak. After testing the whole $ dollar, it carved out a star on the 1 min. and headed south. I shorted the break of the trendline, took a partial at the 62% extension and was stopped out on balance.

The NQ futures looked like they wanted to stage another rally -bars 4-6 printed 3 consecutive higher closes. After breaching yesterday's high, price consolidated. The shake out bar was soft because it had a long lower shadow. The follow up bar not bearish, so I decided to wait for a trendline break.

On the 1 minute chart below, you can see that I basically scratched that first attempt because I thought it was setting up a head fake. It turned out to be a retest of the trendline. Nevertheless, the follow on was range bound during the lunch time doldrums. After three attempts to break the midday trading range to the upside, NQ carved out 3 consecutive WRBs (with volume) to the lower end of the trading range. This is very bearish. Wait for price to consolidate the move and short.

The chart pattern on the 15 min. is an inverse C&H or a H&S top. Either way, on a measured move basis, the target is 100% from the top of the pattern to the BO point. As you can see from the chart, it executed perfectly.

I went long into the close, after NQ carved out a rounded bottom. Partial as price approaches 50 MA.

This is how I would place my fibs for BTU. As you noted, the open is within yesterday's trading range, so the retracement lines go from the previous day low to high. Extension from previous day high to low. Nice aggressive entry after 3 inside bars. Another possible entry is at base of retracement zone. I would partial at previous day low because price is going to consolidate or retrace at support. Best to lock some in to be safe.


Susan said...

Great trades Jamie.

In trades like CNQ, which was within yesterday's trading range, target is determined by drawing fib. extension from previous day high to low?

I traded BTU (on the break of 6th bar on 15 min.) which was within yesterday's trading range. The target should have been set similar to your CNQ trade?


Jamie said...


Perfect entry, very aggressive - 3 IBs. See my notes and BTU chart with response to your question added to above post.

Susan said...

Great. Thanks Jamie for the BTU chart. I took partial at 50% retracement and full at ORL. My first target should have been the ORL - right?

Suppose: In the BTU trade, if instead of the 3 inside bars, the 3rd bar was a shooting star and the 4th bar takes out the low of the 3rd bar (shooting star) - in that case what would have been the target/s?

What zone in the fib. retracements are actually the retracement zone? I see you and TraderX mention about this.

I missed the entry at the retracement zone but entered again around $19.40 when it formed a hanging man like candle.

Thanks for all your help Jamie. I really appreciate it.


john said...

Long rates may have finally blown off. Check TBT - should print a nice hammer today.

Jamie said...


The retracement zone is the 38% - 62% area.

I don't see a hanging man at $19.40. Tell me what time of stick. When did you exit?

I will answer your questions in more detail over the weekend.

Jamie said...

Thanks John,

Nice volume on that hammer.

Susan said...


I always get the candlestick's name wrong. I was referring to the 2 pm on 15 min. chart candle. I entered at the break of 2.15 candle and sold at R2.


Jamie said...


The candlestick formation you describe versus the coiled spring of inside bars does not alter the target, both are powerful candlestick formations.

I have outlined how to use Fibonacci and what it means in today's posting. I think you will find most of the answers you are looking for in that post.

The main point is that while trading in the R-zone, manage the trade closely. Once price breaks out of the R-zone on a closing basis, it can usually get to the next level. Watch for accelerating volume as price moves from the R-zone to the next level.

Your second entry of BTU was perfect.