A Little Intraday Flag Action

Mar 4, 2008: 11:11 AM CST

Today saw yet another gap fade and bear flag so far:

In February, 75% of trading days had an overnight gap. Will March be similar? So far, we’re 2 for 2!

Again, the first play is to fade the gap for at least a 50% retracement into the gap. The pure target is yesterday’s close, but sometimes a more tantalizing trade develops in the form of a bear flag into moving average resistance.

If you’re apt at candlesticks, you’ll notice the large upper shadows on each 5-minute candle that formed the 45 degree angle flag. Finally, a hammer (almost a gravestone doji) formed beneath the key 20 period moving average, signaling a trade (short-sell) to target a “measured move” of the previous ‘flagpole.”

That trade worked out instantly and gave great satisfaction, with the market reversing right as the measured move was complete.

Right now, we may be forming a second bear flag, but the positive momentum divergence will likely limit its potential for a full profit.

Intraday action is almost always fascinating!  Check out the features at INO TV and learn from over 100 educators across a wide range of topics.

1 Comment

One Response to “A Little Intraday Flag Action”

  1. Hardware IT Blog » Blog Archive » A Little Intraday Flag Action Says:

    […] sgrigsby: […]