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Wednesday, October 26, 2005

DRL - 102605




1.) What did I see?
A gap down, with the second and third bars moving down to test the opening range low. The fourth bar is a "hammer-type" candle that forms on support (the opening range low).
2.) What is the entry?
A break of the fourth bar high.
3.) What is the exit?
I closed the trade at the conclusion of the next to last bar - as you can see, it sold off the high leaving a long upper tail (a bearish sign). At first glance, this trade may not seem "sexy". But, considering the lower price, the total move for the trade was ~5%. Not bad for a day's work.

Notes - notice the fifth-eighth bars were a nice narrow range, giving you a few more opportunities to enter before the move (if you missed the original entry on a break of the fourth bar high).

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