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Tuesday, February 14, 2006

KNDL - 021406; 15-minute chart

The market gave me a Valentine's day gift today - a LACK of good set-ups!!!

1.) What did I see?
A gap down and very wide-range first bar. The second through tenth bars rally off the retracement zone (from yesterday's low to the opening range high). The tenth bar forms a "hammer-like" candle that closes just below the opening range high.
2.) What is the entry?
A break of the tenth bar high*.
3.) What is the exit?
1/2 sold after $1 gain; the target for the other 1/2 was the Fibonacci extension of the previous day's low to the opening range high - it was hit a few hours later.

*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. As you can see in the KNDL chart above, the eleventh bar breaks through the opening range high and rallies to the Fibonacci extension.

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