Wednesday, May 25, 2011

Wedge pullback

A low momentum, low volume, three push pullback mid-day (b34,40,48) is a wedge pullback and usually works like an A2.  There are several positives for this trade. It acts similar to a BW fBO, an A2 and a W reversal all in one.

The probability of success of this trade increases if there is a sharp trend bar and no follow-through. A small inside trend bar or any small trend reversal bar increases the chances of a continuation. A Gap bar or a G2 entry increases the chances that the price will take out the extreme.

WP should be usually taken as a swing entry especially if the AM trend was strong.

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