Intraday Tactics for St Patrick’s Day 09
The market was supposed to go down today, wasn’t it?! I sure felt that way but price – after all – is king. Let’s step inside March 17 ’09 to see the “Idealized” Intraday Trades of the day.
I even included a money shamrock to spice up the chart today.
The bias was – for me at least – to the downside (off confluence Fibonacci resistance from yesterday and a shooting star daily candle). In fact, I know of more than a few people who are surprised (and upset) with today’s action. But we do the best we can.
Price initially ran up to test the falling 20 EMA before inflecting back down (failing to make new lows) and then ran up to test the falling 50 EMA, though it only formed a bear-flag (in hindsight). Both of these were ‘idealized trades,’ though both (likely) wound up with a stop-loss as price reversed.
One thing I hinted at in this morning’s post, but didn’t come out and say, was the potential for a “Three Push” Reversal pattern to form – and that’s exactly what happened. That’s why I write these end-of-day summaries – the more you see these actual patterns, the better you’ll be in real-time… whether you believe their signal or not (I was a little too baised to the short-side, while I saw the Three-Push, I chose to ignore it… at my peril).
Anyway, price broke up out of the declining (narrow) trendline at noon and then the EMAs crossed and converged to set-up my favorite trade – the Cradle Trade. It was at this point the bulls had officially taken over the day and the squeezed the shorts (bears) into the close.
I even tried to read a Head and Shoulders Reversal pattern after lunch – it formed quite well… but it too failed as the bulls charged forward into the close. The “Oops” on the chart reflects the actual and confirmed sell-signal… which was overruled by bullish action and a bullish break above all EMAs.
Afterwards, two more retracements formed to the rising 20 EMA, signaling good entries to those of us who weren’t blinded by our bearishness.
In the end, price is king, patterns help quantify risk and opportunity… and I think the Leprechauns had something to do with today’s bullishness!
Corey Rosenbloom
Afraid to Trade.com
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Great post as always Corey. I was actually going to reply to your previous post asking you to analyze todays intraday action having not been able to figure it out. I to was biased to the downside and got beat up a little for it. Not that I am one of those misery loves company types but it is a little comforting to know I was not the only one caught off guard. Thanks, happy trading.
I was looking for a follow through to the downside from yesterday action as well. Stop loss saved the day.
I too noticed the shooting star from the prior day which led me to believe in the H & S forming. I usually don’t use candlesticks much, but does a negated shooting star suggest the ST trend up has some legs?
Thanks for posting your insights.
What is a cradle doji Corey?
I too was expecting the mkt to tank, because I too had taken a not of the shooting star, and the fib levels … and I too was biased on the short side …. but as you said “price is king” ….and of course we all have been wrong about today, because the market is always right. That’s why I always believe in one thing – Honour your stoplosses. Live today to fight another day
Cheers
Leprechauns and this week’s options expiry !
Dominick,
Yesterday was an anomaly for sure. Still not entirely sure the reason. Let’s see if it holds or if it was a bull trap.
Joe,
Same here. For me it was more than one stop-loss, as I shorted both EMA pullbacks, only to be nailed on both. Then I sat aside most of the rest of the day, not willing to believe the ever increasing prices.
Bill,
Glad to see someone else saw the H&S. Was neat forming because it is rare on intraday charts. Oh well.
I continue to think we’ve moved into confluence Fibonacci resistance at the 775/778 level. If that breaks, then we hit 800 quickly for the next confluence resistance.
Until then, we just wait. Could be a bull trap, could be the real thing.
Anon,
I should do a formal post on that. It’s a trade I created/discovered (I even polled the readership as to what to name it) that reflects the highest probability of a trend reversal, boiled down to a specific trade.
It’s when – in this case – the 20 EMA crosses above the 50 EMA (the “cradle”) and where price pulls back to find support at this level. A doji – a candle of indecision – increases the odds that support will hold.
And if it doesn’t hold, the stop-loss is very tight, giving good risk/reward.
Neil,
Right on! No point in fighting price higher. Ultimately, demand won the day yesterday. Especially toward the end for whatever reason. But the charts gave plenty of non-biased, objective information.
I mean, the day started off with a Three-Push Reversal pattern – that should have hit me in the head as an early signal, but sometimes biases are just too strong. That’s why trading is hard!
Reggie,
hahaha
I do blame the leprechauns. Them and their pots of gold. Had to ‘spread the wealth around’ to the stock market yesterday. 🙂