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Wednesday, February 09, 2011

BWLD - 020911

BWLD - I have never eaten there, but I do trade the stock.

I entered on a break of the sixth bar's high, with a first target of the Fibonacci extension (FE). Price broke through that level and made a nice pullback to test it as support.

Had price broke below the 18th bar's low (marked with the second arrow), I would have closed the position for a small gain (I gave it this additional latitude because I figured the $51 whole number would provide additional support). Price held and resumed the rally, cutting through $52, and I closed the position at $52.50 for ~4% gain.

note - ignore the horizontal white line above the $47 level - it is left over from another chart and does not apply. Fibonacci lines were plotted from the previous day's close to the current day's open.



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6 comments:

Anonymous said...

hi x,

aren't you worry about the long upper tails in the first 4 candles?
thanks hector

Trader-X said...

Hector, it was a negative when I was evaluating the setup. But in my mind it was offset by the narrow real-bodies on the candles in the down move (3-5), and their doji-like patterns. All in all, it represented a lot of indecision after the gap up. But, the second candle and the trigger bar candle had the widest bodies of the morning and were green, and there was solid support from the rising 5EMA. So, the positives outweighed the negatives in my analysis.

Anonymous said...

thanks x, your detail explanation of the trade is top notch. all I saw was alot of long tails and would have passed on the trade.

how many candlesticks do you need before entering a trade, 3 or 4?

hector

Mike said...

I second that, this analysis is great and I learn a ton from the trades you post. Thanks.

Times of Your Life said...

@.@ very amazing trade...

ZJ said...

Hi X & Tom C.

X says he "prefers setups to form on/near support".

I have definitely found success this way.

However I've had a gray area the last couple of months. I thought I had the answers but now I'm not so sure.

Sometimes a setup will form on/near RESISTANCE. Previously it has found support and looks like it will break the next level. (Sometimes in live trading I don't honestly notice the difference.)

Often I go ahead and buy the break of that bar. If the market is strong it's a winning trade that makes me believe the setup should have been taken. If it goes against me I tell myself the market has resistance and I was wrong to take it. Those are typically my losing trades.

However, now I'm not so sure if I should be taking those all together.

I would appreciate any insight because I totally confused myself..

Thx
ZJ