At first glance, some of you (Stewart!) might question this set-up because of the upper tail/wick on the first candle. And, that is a valid question. But the next two bars stay in the upper 1/2 of that first wide-range bar, and in general this bullish action offsets the potential negative of the tail/wick.
1.) What did I see?
A gap up and wide-range first bar. As stated above, the next few bars are in the upper half of the first bar. The second bar is a narrow range, inside bar. The third bar is narrow range (NR3), forms a nice hammer type bar, and closes green.
2.) What is the entry?
A break of the third bar high. You can make the argument that a break of the second bar, fourth bar, or even fifth bar high was also a good entry.
3.) What is the exit?
1/2 closed after $1 gain. The other 1/2 closed at the Fibonacci extension of the previous day's low to the opening range high.
Notes - as with any entry below/above a previous high/low (in the case of my charts, the opening range (OR) high/low), you need to watch for resistance/support as price approaches those levels. If it stalls, you want to exit. If it breaks through, the odds are good you will have a move to the corresponding Fibonacci extension. TRLG made a solid break above the OR high on the sixth bar.
No comments:
Post a Comment