POOL gapped down below the previous day's range, and printed a weak wide-range first bar. The range narrowed in bars two through four, with four being a narrow range (NRM), inside bar. I entered on a break of the fourth bar low*.
The target was the Fibonacci extension of the previous day's high to the opening range (OR) low - as I mentioned earlier, the fifth bar collapsed and actually closed below the Fibonacci extension. That is usually a sign that price will continue in that direction, so I held the position. Had it closed back above the Fibonacci extension, I would have immediately covered my short. Instead, price continued to fall and I covered on a break of the fifteenth bar high.
*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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Tags:
Trader-X, Stocks, Fibonacci, Trading, POOL
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