If you look at the second chart, you will see that the retracement zone from the previous day's high to the opening range low also corresponded with the level noted above (the previous day's lowest close) - so there were two levels of resistance.
The fourth bar was the narrowest of the morning, and an inside bar that printed just below the declining 5MA. I entered as the fifth bar took out the fourth bar's low. Price fell back to the morning low, and once it broke through that level it was a straight shot to the Fibonacci extension, where it reversed almost perfectly. I covered at that point for a nice gain.
3 comments:
Nice trade Tom!
Interesting to see how in this particular instance you did not wait for a bearish bar to signal your entry; it seems like the inability of the stock to break above resistance + the sequence of NRB + bars closing below 5 EMA were all good enough reasons for you to get into the trade. Good stuff!
If you care to share, I would be interested in knowing what scanning software are you using these days to find these gappers.
Thank you.
While you are technically correct, I think those first 4-5 bars represented a bearish pattern. So no one overly bearish bar, but several that comprised a bearish scenario.
Most of my gaps come from the RealTick gap list. If you want more sources, X did extensive lists of where to find gaps...some of them may no longer be valid though.
I just started playing with pivot points, and they seem to be pretty consistent. How long have you been using them?
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