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Monday, February 27, 2006

CHK - 022706; 15-minute chart

1.) What did I see?
A gap down and wide-range first bar. The second bar is a narrow-range, inside bar. I would prefer a weaker bar (one that closes red), but it was a valid set-up nonetheless.
2.) What is the entry?
A break of the second bar low*.
3.) What is the exit?
The target was the Fibonacci extension of the previous day's high to the opening range low; it was hit just after Noon.

*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. CHK made a decisive break of the OR low on the third bar.

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