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Monday, December 15, 2008

A few charts from Monday

I have limited time tonight, so I will be brief.

HUN gapped down and the sixth bar broke the opening range low (ORL). The seventh and eighth bars tried to rally, but could not close back above the ORL (note the doji on the eighth bar). I shorted on a break of the eighth bar low, and covered at the Fibonacci extension (FE).




DRYS gapped up and I entered on a break of the second bar's high. Last week we discussed the halfway point between the high (low) and the FE. DRYS stalled at that point (black dashed line), and I closed my position for a nice percentage gain (note the long upper tails and doji at that level leading me to believe it was significant resistance today).



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6 comments:

TonyB said...

X,

These are two interesting trades. Question----why, on the HUN chart, would you not have shorted at the OR low after the 4th and 5th bars were inside bars? And, if you don't mind, where did you find that trade?

I had a nice "X" trade today in CRM. I picked that up from the folks at "highchartpatterns.com". I'm not much for market letters, but these folks post some nice charts every night, albeit their methodology differs from "X" trades, but I've used it a lot applying the techniques from your blog. Let's put it this way, I've used it successfully ASSUMING I'm using the techniques from your blog.

TonyB

Susan said...

Trader-X,

For drawing fib. lines on a 5 min. chart, do you use only the first bar as opening range?

Thanks for your response.

Susan

TL said...

Trader-X,

Can you help me understand what makes the doji on HUN a good short trigger, especially when the precious bar left a long lower tail? Thanks a lot!

TL

David said...

I also shorted HUN. My answer to TonyB is that the break of the opening range low and pullback is a higher probability setup, as opposed to shorting when it is still above that support level. That also answers TL's question as it is a break of support, pullback, and failure to close back above support thus now making that level resistance.

X can chime in if he thinks the same, but that is my opinion.

Trader-X said...

Good thoughts David. In general, entering on a break and pullback is the safest and highest probability. I don't always do that - as you can see with DRYS - which is fine as long as you know you are in a riskier trade (ie, price may not break the ORH or ORL). So TonyB, there is nothing wrong with your proposed entry...it just carried a little more risk. To be honest I did not even see it, so I did not have to make the decision. This trade came off my gap list.

Susan - I don't have a fixed number of bars, it is usually what I consider a swing or pivot high/low for the opening.

TL - the previous bar did leave a lower tail as you pointed out, but price had broken support and rallied up and failed to close back above the ORL...so in my view that was bearish.

Tanner said...

I have been trading DRYS for a week now, good moves.

Nice blog, just found it.