In "Comments" of Friday's post, Joe asked the following:
"Trader-X, I would like to get your thoughts on KO. 4th bar hammer, 10-minute chart. Would you have taken it and why/why not?
Thanks for a GREAT blog."
My response was:
If you draw a line at the halfway point between the high and the 50% retracement of the first 30-minute's range, you will see the hammer formed just below that level.
The next bar tried to break through that resistance, but failed and left an upper tail. Price then fell back to the 50% retracement and rallied off that level, breaking earlier resistance and moving to new highs.
There is nothing wrong with taking the hammer entry if you accept the higher risk of having resistance just overhead. Sometimes it will break through, sometimes it will not. A more conservative approach would be to wait for a better entry later...knowing that you run the risk of missing a few setups that will take-off right away."
Here is the chart of KO:
That leads me to reiterate a point I made in a post earlier this month about blog workings:
1.) If you have a question about a trade, DON'T EMAIL IT. Post it in comments. I do read every comment, so if you post it I will read it and most likely respond. But posting in comments gives you the added benefit of having others offer input - I always see RJ, QQQBall, Z, Jim, and others offer advice, thoughts, and suggestions. And frankly, many of these people are smarter than me!!!
Additionally, if you are not reading "Comments" on the posts you are missing out - there is often some good information there.
There were several good setups on Friday...I will try to post a few more charts over the weekend (no promises), but here is one that stands out.
MFE gapped up and the first three bars left long upper-tails. The fourth bar made a new high and reversed to close below the halfway point between the morning's high and 50% retracement.
I entered short on a break of the fourth bar's low, watching the 50% retracement as an area of resistance that would have provided a bounce (and ruined my trade). The fifth bar broke below the 50% level, and although the sixth bar closed back above it, it left a long upper-tail. Price declined from that point and I covered four bars later at the FE.
I actually made a rare late-day trade in MFE, re-entering as price formed a bearish candle on a retrace to the FE (see the lower white arrow). This is a setup that can be found throughout the blog...search "Beyond the Fibonacci Extension". It was a riskier trade as it occurred later in the afternoon, but I had a great morning and MFE was showing continued weakness. I covered at the R1 Pivot line (blue line).
Trading 27-April-2016 (+ $66)
22 hours ago