Thursday, September 17, 2015

The openers: 1W (first Wedge) and 1P (the first pullback in a trend.)

The market often moves sharply on poor signal bars (b2, b9, b12) in three pushes away from the open. The initial move off the open often turns into a W like move (b1-b13)  and results in a potential trend move that usually takes out the other end of the W (low of b1). If the breakout is strong, the move may continue to another measure of the W (distance from b1 L to b14 H).

Often W setups are not clean (b14). When W setups are poor due to overlaps and tails preceding (b10-13), its usually best to let the W succeed (b15-16) and enter on a pullback (b18). The first pullback of a trend gives the best chance for a long swing that can be held till the trend terminates.

Since b3 is a trend move from an ib2 setup, b9 is a 1P setup as well, but with a poor signal bar. It is a good practice to wait for a second entry in such cases.

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