Tuesday, February 17, 2009

Failure Leads to Fast Move - Barrick Gold Corporation (USA) (Public, NYSE:ABX)

Entered ABX long on a mini base & break. Price rallied up to R2 - whole $ level and carved out a tweezer top reversal, putting the position into a slight loss. As price exit the retracement zone, I sold twice the size for a short. Failures usually lead to fast moves and that's exactly what ABX gave us. Took a partial after 3 WRBs and exit balance at S2. ABX is a usual suspect for me and I mentioned gold in last night's technical post.

Someone requested that I explain how I use MAs. I use them for support/resistance. On the 5 minute chart below, we note that price never closed above the downsloping 5 EMA until the primary target S2 was met. Price and the EMA are like magnets, so if price gets too far ahead of the EMA, expect a retracement.

Crossovers are good indicators of the bias. If the EMAs crossover above price it is very bearish and vice versa.

4 comments:

yr said...

Hi Jamie,
Can you share why your target is S2 instead of S1?

Can you take a look at GS today. I think there is a good short entry when it gapped down, retrace but failed to go pass $90. Would a break of 10.50am ET 5 min bar low be a good entry point? There were a few IBs after this bar. Thanks

PDT said...

YR, you had to mention GS. I got slammed today on GS for one of my swing trades. I should have exited after the potential double topped form last Friday. Any thoughts on the swing trade? Bought the rebound of $90 last Wed and held till today.

Jamie said...

YR,

I'm really focused on R2 and S2 and whole $ levels.

GS consolidated at the round $ level which was the edge of the retracement zone, and couldn't break above so it was a good place to get short below the outside bar as you point out.

Jamie said...

PDT,

You're right when GS backed off of $98.00 for the second time Friday, you should have exit at least half. Your stop had to be $90.00, so I hope you are out.

A lot of the stronger financial stocks failed on Friday. V was a good short when it failed at $58.00, MA was also a short if you could get shares. I think we might see a deeper retracment until the markets settle.