"X, I wanted you to know that the halfway point you reference is coming in handy. I am still trading the classic style using the previous day's range, but I have incorporated the halfway point between the 50% and high/low and the halfway point between the high/low and the fibonacci extensions. In PGF Friday, it seemed a perfect top out pattern that you write about and it moved up to the halfway point in one bar. It left a long upper-tail, and that was my signal to get out. It may not seem like much of a move, but it was actually over 3%."
I marked up a chart for your reference with the Fibonacci lines plotted from the previous day's low to the OR high:
There were several "u-turn" setups on Friday. MS gapped above the previous day's high and then declined with the first bar. The second and third bars carved out a bottom with hammer-like candles, with the third bar forming a textbook hammer that closed positive and just above the 50% retracement of the morning's range. The next two bars rallied to the FE, where I closed my position.
What can $5 do? Read about "Good Karma" and RJ.
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4 comments:
Do you care anymore if the gap is above or below the previous day high or low?
Tim, I asked the same question a few weeks back and while preference is giving to above or below the high or low, if there is a lot of white space then the gaps tend to work regardless. I hope that helps.
Thanks Todd.
I am still using the previous day's range for 75% of my setups too. Thanks Trader X!
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