1.) What did I see?
A gap down and move up into [probable] resistance from the retracement zone of the previous day's high to the opening range low. The fourth bar appeared weak, although in reality it was not. I tried to imagine it to be a hanging man - in reality it was not even close. Bottom line is I was cocky from the consistent run in the "bread and butter" set-up I have highlighted over the past few weeks, and tried to force a trade that I never should have taken.
2.) What is the entry?
A break of the fourth bar low.
3.) What is the exit?
The target was a move back to the morning low. The position was closed when price crossed above my stop - the high of the third bar.
Notes - many of you will say this trade did not work because the market was strong today. Wrong. It did not work because it was a terrible set-up.
I am often asked if I watch the broader market to determine what trades I take. No, I don't. The advantage to following "movers" or "hot stocks" is that they have a mind of their own, regardless of the broader market direction. If it is a good set-up, it should work in an up or down market. But, I am not oblivious to what is happening away from stocks - I will sometimes factor the general market dynamics into my exits, as with MDT today.
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