Wednesday, August 05, 2009

Breakout - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

Last night we said that POT was coiling and looked ripe for a BO either up or down. The red lines indicate the pre-market high/lows. The pre-market gives a pretty clear signal that price wants to break to the upside.

In order to trade the BO, we move to the lowest timeframe. On the 1 minute chart below, we see that price gaps and pulls back on lower volume, candles form lower shadows and we pull the trigger as price approaches the BO base at $97.00. If price stalls at the pre-market high, we'll exit. That doesn't happen so we hold on until price breaches consolidation lows, where we lock some in. Price retraces and eventually comes back down close to BO point. Once it rallies back up to base, we add back to our position at the same price we partialed out.

Price makes new high and continues above whole $ level - $100. After it prints a lower high, we tighten stop.

GRMN - B&B back up to ORH.

Stocks to watch tomorrow - CNQ - 2 inside days. Gold stocks - waiting for range BO - Canada said it will takes measures to curb $CAD strength as the higher dollar will hinder economic recovery. Also continue to watch $USD and reaction to rate decisions overseas - Euro and British pound.


anarco said...

It helps a lot to see how you traded POT Jamie!

TJ said...

Yeah, these stocks that coil usually BO on the open, so I use the pre-market action as my guide.

Day Tradr said...


How did you get the blue S/R lines on the GRMN chart esp. the lower support line at 32.46 area. I am trying to learn S&R from your charts.

You mentioned that you draw these lines before on the 15 min. and daily charts. How do you draw lines on 1 min. (the POT 1min. chart). Do you draw them before or do you draw intra-day based?


Anonymous said...

Hey Day Tradr,

If I may, Jamie's blue S/R lines on GRMN are based on the intraday action only. The top line is the ORH. The bottom line is the approximate top of the consolidation/base (ascending triangle). He set it at the last swing high in the consolidation. Notice that the bottom blue line is also an excellent dividing line between the OR and the consolidation just below the OR.

TJ said...

Day Tradr,

Jim's comment is exactly right. I'll just add that it takes two points to draw a line. So after two pivots into the $32.50 area, I draw my line, the third test of that price usually breaks. GRMN was printing higher lows, so there was a good chance that the break would be successful. Also, note that the pre-market low of the gap day held as support on Thursday. Friday, it based in a narrow range just under $32.50. So now I have three lines on the GRMN chart and so far, it looks like it is forming a flag pattern, so I'm keeping it on the WL.

For POT the lines on the 1 minute chart for partialing in and out after the BO, were drawn intraday. Those lines came back into play on both Thursday and Friday for more trades. Now we have a H&S top in POT on 15 minute chart as price has settled back on our original trendline which I posted Tuesday night. I'll post the chart over the weekend so that you can see how the lines can be used to plan the next trade.

Day Tradr said...

Thanks Jim and Jamie for the response. I appreciate it. Do you see any tradeable 3 PP setup in DISH today on 5 min. chart?

TJ said...

Day Tradr,

Yes, but I'm not in love with the base for several reasons: BO occurs just below ORL (15 min); too close to round $ number; and the base is somewhat sloppy.

Day Tradr said...

Thanks Jamie. Really appreciate all your help.