Hey guys,
What a week, huh?
Here's the short we were looking at:
We learned two things:
1) Holding during the Fed can pay big time or hurt big time.
2) Stop placement on this trade was absolutely critical AND you had to take some heat on the trade IF you held through the Fed.
So this short had 3 possibilities as far as I see it:
1) Exited at the close on Tue b/c you did not want to hold during the Fed. End result: +4.25 (bought beginning of Tue and sold end of Tue).
2) Got stopped on Fed day based on where stop was. End result: -10.75 pts
3) Held and kept your short, but now exited based on new buy (more below). End result: +23 pts.
So, as you can see, where you place that stop was just critical. In this scenario, as I mentioned in another post, the stop would need to give the trade some room to work due to the Fed announcement coming.
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NEW TRADE SETUP AS OF FRI!
Wow, this is a nice one.
Here's what I see:
1) Strong support @ a strong psychological number (1500 even).
2) Look at the volume on this spinning top at this strong support level.
3) We saw a very similar pattern recently that produced a decent profit.
If we add the 50 and 200 SMA, here's what we now see:
I'd prefer it to be touching the 200, but close enough.
Here's a long that has 2 possible entry points:
1) Enter @ market Sunday evening to go long.
2) Wait until price breaks the high of this spinning top. The high was 1525, so once price breaks this level, go long.
There's good and bad of each, which has been discussed
here.
One last note - as we saw earlier, stop placement is critical.
In our trade here, note that this spinning top's low is not quite the low of the previous hammer:
As we also saw previously, the hammer's body/low can be retested so your stop placement is critical here as well.
Good Trading and Do Your Own Due Diligence At All Times Before Placing Any Trades!