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Tuesday, August 15, 2006

BRCM - 081506; 15-minute chart

1.) What did I see?
A gap up and wide-range first bar. Bars two through seven are also somewhat wide range, and bounce around the opening range (OR) high - closing above and then back below it. Bars nine, ten, and eleven start narrowing in range with the eleventh bar being the narrowest of the morning (NRM).
2.) What is the entry?
A break of the eleventh bar high*.
3.) What is the exit?
The target was the Fibonacci extension of the previous day's low to the opening range high; it was hit at the end of the day.

Set-up grade = C+; the entry was below the OR high, and I did not like the tails and previous breaks above the OR high. But, looking at the big picture price was strong and I liked the rising moving average and narrowing bars.

*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.

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John Wheatcroft said...

I know you guys don't pay much attention to averages and the like but if you want to see something really neat plot BRCM, PNRA, STP and RBAK on a 15-minute chart with an 8-period EMA. Notice how each of these does what I call "returns to 8" at about the same place you would have taken the trade anyway.

I've been looking at this as a possible trading trigger for awhile and I recently read about it in John Carter's book - Mastering the Trade.

(I recommend this book with no reservations - it contains a lot of good setups and methods - all fully documented).

Terrance said...

John - thanks for the info. Any smoothing factor on the EMA?

Terrance said...

And 8 is a Fib #!