Thursday, December 9, 2010

A hard Wedge reversal

 Due to the large gap on the open, I could trade the 1 minute chart on the open. The opening range (b1 to b8) had a failed Breakout with double bottom on b15.

From there the price moved up three pushes to a wedge (W) at b30. This short could be held until the W reversal further in the day.

A reversal bar above a large gap is always a good trade for a scalp at least. Today, your scalp would have worked but your swing portion would be stopped out for breakeven. On days like this, many traders miss a good runner unless they re-enter on the 1 minute chart, which provided a W entry. Even on the 5 minute chart, a micro-W was clear due to the three spikes up.

The double bottom up down at b11,12 is a possible reversal, however with 5 bear bars against the buyer, it ended up working like a trading range. A short above which proved successful.

b18 technically was a W, but its signal and entry bars closed weak. This led to a further A2 short off b24 on a less than desirable looking signal bars.

b29 was a very strong wedge and was a great potential swing trade. So were the A2s at b40 and b65.

Shorting b22 and b55 proved profitable today, however in general these trades are dangerous. There was possibly a W reversal before b22 and b55 could have been a trap for one more leg up. These trades can be taken with lighter size only but leaving out lesser probability trades is the best option in the long run.

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