I always preach that if you enter below the OR high or above the OR 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.
Here are two examples from Friday of the OR low providing support. You can still make money off of these trades, but you have to be prepared to exit if price stalls (or reverses) so you don't give your profits back.
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trader-x,
stocks,
fibonacci,
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5 comments:
I would say on PDS a break of the 4th bar low. A long upper tail, declining 5.
It looks to me like the OR low was tested on the tenth bar, support was confirmed and the entry would be the 11th bar, watching for resistance at the next fib level.
Zentrader, X is talking about the OR low providing resistance if you enter a short trade above it...
Other posters - on PDS, I think a break of the low on bars 4 and 6 would have been a valid entry. Though I am sure X would tell you he prefer that they be red and not green.
PDS was a flat-out reversal at the OR low...to Zentrader's point I think I would have considered a long entry on the 11th bar when it crossed above the5MA...with a target of the retracement zone or 34MA.
WLK was a stall out at the OR low...you would not have given back any profits if you held, but it was not going any lower.
TJ
FWIW, I do this all the time. I appreciate your post and constant reminders. One day I will develop the discipline.
Another post for me to print and hang above my computer!
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