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Saturday, February 21, 2009

Weekend Roundup - 022109

First, if you have a Digg account go show some "Digg love" to Jon from "Five Rules For Life" - digg this post.

"Comments" have been on fire the past week - a lot of people are posting questions, trades, thoughts - and there is good interaction and discussion between the participants. A few highlights:

Sunyata made a trade in SHPGY on Thursday that falls into the "top out" category; her his (no offense intended) entry was a break of the third bar low:

RJ discussed a trade in WFMI. It was a variation of the "perfect pullback"; his entry was a break of the sixth bar high. He said "I don't know if X would have taken my trade because my trigger bar was red, but I liked it because it could not push down below that support and closed on it." The support he was referring to is the halfway point between the morning's high and the 50% retracement (white dashed line). RJ is right - I do like the entry bar to be green, but I also like the bullish action he described.

Earlier this month someone asked about the "perfect pullback" setup and specifically if DO on 0209 fell into that category; they entered the trade on a break of the sixth bar high and were stopped out later in the day. Looking at DO, I would not have considered this a valid setup. There are many reasons but the most glaring is the break of the 50% retracement on two very weak bars (the third and fourth). DO seemed destined to fail at the first resistance, and it did (the white dashed line).

Compare DO to HIG which setup on that same day. HIG also pulled back on the third and fourth bars, but they were much more orderly than the same bars in DO and - more importantly - the fourth bar bounced off the 50% retracement and left a lower tail. The fifth bar rallied and closed just above resistance (the white dashed line). Entry was on a break of the fifth bar high and the trade was good for just over 3% before it failed at the halfway point between the high and the FE. HIG is not the best example, as most of these setups will run to the FE and beyond...but I wanted to post a trade from the same day. I will highlight more in the upcoming days.

Study both charts and look at the difference in the price action. The quality of the pullbacks on both should be apparent.



DEM said...

Hi All,

Thanks X for the post!

I am wondering whether we can have some kind of discussion board. We can have a discussion on a particular chart etc. Please note that i am NOT asking for discussions on live trades. I am not interested in knowing what someone is about to trade.

For some reason yesterday provided a lot of setups. Maybe i am getting better at finding setups. I thought CECO on the break of the 4th bar was a nice setup. The 4th bar closed above the 25% line with that line acting as support. It was also a "fill the tail" type of setup. COCO on the 4th bar was also a nice setup.


sunyata said...

"Sunyata made a trade in SHPGY on Thursday that falls into the "top out" category; her entry was a break of the third bar low:"

Haha, please note for the future that that "her" should be a "he". Also, as I have been very much needing to share the type of trades I have been taking, I have entered the blogosphere at


Best to everyone!

Trader-X said...


My apologies! I have a friend called "Sun", and Sun is a woman. So I was biased!!!

Trader-X said...


I consider "Comments" the discussion board. I don't have the bandwidth for another site. "Comments" function well for reader feedback, questions, and discussion.

re: CECO; I traded that based on "fill in the tail". Good trade.

COCO I didn't trade. One thing you will note if you are plotting Pivot Lines...the fourth bar also closed above (right on) the Pivot Point...a bullish indicator.

Trader-X said...

Here is sunyata's blog:

Zenso Trader

niki said...


I TRAD 15 minute bar and i have 67% winners ,but do you have some strategy to cut the lossing trad before the reach the targat
or some signal that tall you "take everything and get out "

Anonymous said...

Hi X,
As usual great posts.
On 2/19, I did paper trade on RS using 10 min chart, entry on close of 5th bar, the trade failed before reaching FE. But does this qualify as pull back trade, do you see any pitfalls ?


DEM said...

Hi X,

Would RS on feb 19, 10 mins, be considered as an e.g. of a perfect pull back?


sunyata said...


No worries, it's not as if "sunyata" gives many hints as to gender identification.

Thanks again for all your hard work!


Trader-X said...

DEM and Sean, RS was a great trade. Just because it doesn't reach the FE does not make it a bad trade...if my quick math is correct, it was a 5%+ gain.

The bounce was off the halfway point between the high and 50% retracement, and you have to watch the lines for resistance when you are long. The halfway point between the high and FE was the reversal point, and you could have sold half there and waited to see what happens before seilling the other half...or sold the whole position and booked the 5% gain in about half an hour.

Trader-X said...

Niki - the short answer is no, there is no "if this happens, do that". I watch price action at probable reversal points and decide whether to hold, exit partial, or exit all. I have been trading for almost two decades, so it is probably more feel...but if you watch the key areas and price action you get hints to the strength of the move.