Today closed at its open after moving up and down, making a doji or plus sign on the daily chart. The first two bars were were an obvious trading range, so the market would have to hold above it and give a two legged pullback for a buy or the more likely scenario of the breakout failing. The breakout did fail and it tested the other end of the range. At this point the market tried to fail it twice, once on the move upto bar14 and then again on the move upto bar 22. At this point, it was a two legged pullback in a bear move near the ema and therefore a legitimate short signal. However this was close to lunchtime and there was a very good chance there wouldn't be any real move for a couple of hours. It was a good decision to wait for the next signal.
The market moved three pushes down to double bottom at b40, indicating a possible reversal or move up. However, it could not give a successful double bottom pullback and thus broke below the double bottom which normally results in a measured move down the size of the range, which the price went to the tick.
At this point, we also had a TCL overshoot, so even tho the reversal bar was weak, it was probably an acceptable buy. The first pullback after the wedge (W1P) forced a buy at the top of a flag, but it was probably ok, since the flag was only two ticks long. Cautious traders could stay out and enter on the A2 and double bottom at ema on b77.
What do you see as the two pushes down to b77 to make it an A2? Is the move to the low of b76 the 1st and the DB the 2nd?
ReplyDeleteDave, b71 was the first pullback in the move up stops below it were taken out and the bars leading to b77 was the second pullback. When in doubt, use this rule: did the buyers of the first pullback scalp out or get stopped out? if so, its an A2
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