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Saturday, November 29, 2008

ECA - 112608

I am playing catch-up from last week. Here is a trade from Wednesday:

ECA gapped above the previous day's high and immediately fell to the 50% retracement. Price rallied off that level to the opening range (OR) high, reversed, and fell back to the 50% retracement. It formed a doji-type candle above that level and I entered on a break of that candle's high. ECA moved back to the OR high, broke through that level, and rallied to the Fibonacci extension (FE). I sold my position at that point as I had to take off the rest of the day for personal reasons.

As you can see, ECA setup above the FE (something I refer to in past posts as a "beyond the Fibonacci extension setup"). There was a good entry around 2:00EST on a hammer candle that yielded another point and a half.



anarco said...

Congrats on this excellent trade and chart!

I wonder if you could elaborate on the doji-like candle used as your trigger bar. Since that bar takes place after 2 wide bars, I would have interpreted it (incorrectly) as a moment of rest (consolidation) in the down motion and not as a reversal, especially since the bar has a long upper tail. Did you see it as a reversal because the doji-like candle forms right above the 50% fib retracement (an area that successfully acted as support earlier)?
Today I was also studying your PCLN trade on 11/07 and in that trade you used the third bar as your trigger bar. That entry is a bit clearer to me, since it is close to a “more traditional” bullish star reversal pattern and the third bar confirms change in direction.

Thanks in advance!

Trader-X said...

I would have viewed it the same as you (a pause) had price broken the previous bar's low (prior to the doji-like candle).

But it didn't, and as I saw it price was testing support for the second time (the 50% level), and if it succeeded it was also a higher low. I like doji candles like this at the lows - though you will not find it as a textbook definition. What it means to me is price rallies but fails and the close is near the open (thus the doji with long upper wick). The next bar rallies and this time takes out the doji high...meaning buyers came back and pushed it up a second time and this time they succeeded where previously they failed.

Anonymous said...

CHK bounced at the 1.382 Trader X extension on friday.