This will actually be a good lead-in to watching momentum bar midpoints intraday.
Straight out of the open RIMM displayed strong momentum, whether it was short covering, long entries, a combination of both, who cares.
With a show of momentum you can figure that people are looking to buy a dip of some sort (but the smart ones will only pay wholesale for it). Looking at the first 15-minute and 30-minute bar of the day, the midpoints of these two bars was right around $56.
Price retraced after the initial impulse to $56.13 before turning higher. So, what was $56.13?
An important note here: If I'm looking for a pullback to $56 and price doesn't make it that far, then I should be looking for clues of a potential turn-around, such as we saw once price bounced at $56.13, retraced, formed a higher low, moved higher and then broke out. Oftentimes it looks like this:
Here are the 5- and 15-min charts:
Referring to the above charts, the $56.13 area was a "confluence" of things:
- It was Resistance for the previous day, as shown on the 5-min chart.
- It was also the midpoint of the second 5-min bar of the day (to the penny! which kinda blows my mind), not shown but easily visualized.
- It was the High-Low Fib. retracement from 11/4 to 11/9, shown on the 15-min chart.
- It happened to coincide with a 38.2% retracement as measured off of the PDC and the opening swing high (not shown).
The point being, it was a "dip" perceived as being fair value at that time. But I think the most important point is to be aware of potential support and look for a pattern that supports your premise, similar to the one illustrated above.
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