I found a lot more opportunities today than Wednesday or Tuesday. The homebuilders presented several set-ups, with LEN and HOV being my two best trades.
LEN offered an entry off a break of the third bar high. The third bar was a narrow range (NRM), inside bar (note the support from the rising 5MA). There were a few red flags - the entry was below the OR high*, and the candle was not anything special (I would have rather seen it close at the high). But I took the trade aware of those increased risks.
The target was the Fibonacci extension of the previous day's low to the OR high - it was hit three bars later.
LEN then offered another entry above the Fibonacci extension ("beyond the Fibonacci extension set-up") as it closed above that level with the thirteenth bar (note support from the rising 5MA). I was looking for a break of the 5MA to close the position, and it did not happen until the end of the day. I sold as the last bar broke the previous bar's low.
HOV also offered an entry above the Fibonacci extension as it closed above that level with the thirteenth bar. It also had solid support from a rising 5MA, and was a narrow-range bar. As with LEN above, I was looking for a break of the 5MA to close the position, and it happened on the next to the last bar of the day. I sold as the last bar broke that bar's low.
*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.
trader-x, stocks, fibonacci, trading, len, hov
Trading Notes for the Week of February 8, 2016
7 hours ago