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Saturday, October 21, 2006

LMRA - 102006; 30-minute chart

posted by Tom C:

The entry was below the OR high*, so it was somewhat riskier as you needed to watch for a reversal at that point.

But, LMRA provided two compelling entries with X's "gravestone doji" type candles. Both entries had support from a rising 5MA. Price rallied to the Fibonacci extension of the previous day's low to the OR high, where it promptly - and sharply - reversed. That just shows the importance of having a profit target and taking profits!

*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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