Wednesday, December 15, 2010


Today was a rather tough day but those who took the weak signals did well. b1 was a bullish reversal bar inside yesterdays range with not much of a gap to speak of and therefore does not qualify to be a first reversal. Many such bars end up failing quickly and taking out its low (such as 2010-12-06). However b2,3 trapped buyers and sellers and a buy above b3 was probably OK.

b6 was a breakout bar and there was a good chance the price would go to a MM before it reversed. That's why neither the L1 at b8 nor L2 at b10 were good shorts. b12 could be interpreted as an A2 long and there could be possibly 2 legs up but there were not. b15 was a poor W signal followed by a terrible looking W1P at b19. the W1P broke out to the down side and a tight trading range gave an A2 short. This was the easiest trade of the day. After taking out the low of yesterday, there was a wedge pullback (WP) that gave a gap (G) inside bar short signal. b49 was a possible A2 short and some traders probably got stopped out on b54 before it resumed down. Market gave a scalp to b44 longs before it turned down.

An overshoot at b61 and buying convinced most shorts to get out below it on b66. The scalp on b66 worked, but its a riskier trade since there is not much time left for a swing. The first pullback after Wedge (W1P) at b70 is the better trade.


  1. Today there were a few traps. b1 buyers got a terrible entry bar and were stopped out if they moved their stops below the entry bar. Lesson: do not move your stop to breakeven until the price has moved 5t.
  2. b17 shorts who thought they were shorting L2 were stopped out on b19. There was no price action entry on b16 since it did not go below outer bar b14. There is no good L1 until traders have entered. b20 is the correct L2 entry (below b19)
  3. 49 was a possible L2. However when the body is inside the previous body, its a variation of an inside bar and the entry would be below b48.

No comments:

Post a Comment