Quick DIA Breakout Trade

Aug 29, 2007: 10:19 AM CST

I wanted to show a nice setup that developed just a few minutes ago in the Dow Jones ETF – DIA (5-minute chart):

Notice the consolidation and ‘triangulation’ that formed as a result of the convergence of the 50 period MA above and the rising 20 period MA below.

Aggressive traders could have positioned themselves inside the consolidation, but the greatest odds for a successful trade would have occurred at the break of the observed range, which occurred just under $131.30. A stop would have been placed either slightly below the breakout (conservative) or below the rising 20 period MA (aggressive).

Initial target: Upper Bollinger Band (achieved very rapidly) for a quick $0.30 gain.

The more you see ‘idealized trades’ unfold in real time, the better you’ll be at recognizing them and acting upon them with greater confidence.

2 Comments

2 Responses to “Quick DIA Breakout Trade”

  1. Glyn Says:

    Hi Corey,
    Would love your thoughts on what happened from a technical perspective in todays trading.

  2. Corey Rosenbloom Says:

    I’m on it! Next post.

    Thanks,

    Corey