Wednesday, May 4, 2011

Large bars on open


Large bars on the open are usually a sign of spike and channel action. The channel itself may go on until the end of the day, but its usually not a hard trend. The best option is to take 2 legged pullbacks and second entry with-trend trades such as b21.

A strong overshoot (b22) and a second entry (b41 same price as b36) are needed for a reversal entry as with any strong bear day. A trendbreak and test is likely to be rare. When the channel reverses, you should expect a pullback at the beginning of the channel, no matter how strong the reversal looks.

The most important thing to remember is not to take a first reversal (b9) on a day with large bars. Its unlikely to succeed on the first attempt.

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