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Wednesday, November 08, 2006

CDWC - 110806; 15-minute chart

This set-up was riskier than most I take - the "hammer" was by no means perfect, and the entry was below the opening range (OR) high.

But, I liked the price action. CDWC gapped up and pulled back to a rising 5MA, and formed a "hammer-type" candle on the fifth bar. I entered on a break of the fifth bar high, and price rallied from there to hit the Fibonacci extension of the previous day's low to the opening range high.

A good trade, but I give it a grade of C+ because of a few red flags.




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14 comments:

Daniel S. said...

Congratulations America!

X, was LLL a good short on a break of the 7th bar?

Trader-X said...

Daniel, for me I would have passed because I did not like that crazy wide-range (strong) first bar and the fact that the entry was above the OR low.

But, if you went into it knowing your increased risk, it was a good trade. Similar to the CDWC long I posted.

BRL was another short today that I preferred to your LLL...look at the chart and see what you think.

NoGreedNoFear said...

X, would RL be considered a B&B setup ? Would you have traded it ?

Thanks.

Anonymous said...

BRL was a good short, and RL was a good long after the 2:00 candle.

T.J.

NoGreedNoFear said...

I guess I should have said why I thought RL was a B&B. On 30-min chart the 2nd bar was a hammer on the fib retracement (from prev day low to OR high). I was rather big and red but the next bar (3rd) was green, an inside bar and closed strong. The MA5 seemed to serve as support also for bars 2-3. Finally, bar 4 was also a hammer on fib, the NRM, and at support on MA5, but close red. Entry point : break of 4th bar high.

QQQBall said...

WCG

shorted the retrace. had the short zone 60.68 to 60.78, but i got impatient & went short at 60.67 - as the group was weak. usual .50 target. stop was wider than usual at a teenie (.06) over the round number. some real wide spreads so easier to stop run. the same R level held on the bounce later in the day - i couldda re-shorted, but had ex-wife to deal with. ;)

the fibbo target was hit, so when they ran the stops under 60, i figured that was it. pretty much range bound rest of day.

lbcando said...

Love your site...hate your politics...

Took CRDN off the fib retracement small risk on break of 7th 15min bar.

lbando

Jamie said...

Hey X,

Nice job on CDWC! The setup is one of my personal favorites and you're only rating it a C+. How about a B- given that the 5th hammer-like bar is also a bullish engulfing bar?

I tried to post this comment earlier and got "this page cannot be found". So if you're getting this comment for the second time, delete.

KayakHandy said...

Jamie, I agree with you 100% on the the CDWC setup being much better than a C area rating... However it is X's rating system and thats how it works.

Here is the reasons why I rated the CDWC setup a B+ and the risk/reward ratio an A, it would have recieved an A- for setup if volume would have dropped off much more during the 2nd, 3rd, and 4th bars.

1. The stock has been in an upward trend since July 2006.

2. The stock has easily surpassed resistance levels of July 2005.

3. The stock has just passed and closed above long term resistance highs set in Nov. 2004...kind of hovering around this area but is showing real strength.

4. The Short term 3 day trends are all up rising along the short term MA's and the 5MA is above the 10 and 13MA which is above the 20 which is above the SMA34 which is above the 50 period MA's

5. The rest is like X described in his "what did I see"

6. In my opinion the risk was only about .10cents and the reward was mucho grande. An "A" all the way for R factor. I used the low of the 15th hammer bar on the 5 min. chart as the lower stop and entry. I know that X uses the 15 and 30min. charts but I find that different stocks trade and signal on different time frames so I will use them also.

Jamie said...

Thanks KayakHandy, that's a lot of info!

Trader-X said...

NoGreed - RL looked like a great play on the 30. TJ also entered late in the day per his comments.

Jamie - good point and I agree.

NoGreedNoFear said...

Thanks X.

I have 2 more questions if you have the time.

1- It seems your MA5 is an EMA (exponential) and your MA34 is a SMA (simple), is this correct ?

2- Do you use pivots to filter your trades (I know you were experimenting with them before) ?

I'm sorry if these questions have been answered before. I have been away from your blog for many weeks.

Thank you for your comment on RL and looking forward to your answers on these questions.

Good trading day to all.

Trader-X said...

I think you are right on the MA's - though, I don't think it really makes a difference (between SMA and EMA) - they will both give signals at one time or another.

Yes on the pivots - I find stocks that open above R2 or below S2 have a higher probability of being successful.

NoGreedNoFear said...

Very appreciated X. Thanks.