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Saturday, September 30, 2006

STEC - 092906; 30-minute chart

posted by Tom C:

I did not find a lot of opportunity on Friday. Here is a trade I did take, and it is another example of the "U" set-up I have talked about recently.

The entry was below the OR high, so X's standard disclaimer applies*. It was a lower priced stock, and the % return was around 3%. Note the reversal as it tagged the Fibonacci extension.

*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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JM said...

Hi, you said "if it stalls, you want to exit". How do you define stalling? I've tried to trade similar strategy if find it difficult to define when we have a situation where we should exit when stay on in hope of the price breaking above.

Anonymous said...

JM, look through the charts here and I think you will find good examples. In general I look for long tails, failure to get above the halfway point, narrow bars, and it just taking too long.

Hope that helps.