The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at toddstrade@gmail.com
I am always open to questions, comments, or suggestions on how to improve this blog.


Saturday, October 8, 2011

FAZ

I almost bought this as price was testing the 50% Fib. early in the morning.  I flipped through some more charts, came back to it, and I missed the initial move.
A 3d setup occurred into the close of the previous day and failed to follow-through (which often allows for a a good reversal trade).  Coming into the next day, consolidation at the previous day's low allowed for another 3d setup to form (I still consider this a 3d regardless of the fact that the 3/10macd technically showed 4d criteria.  It is close enough and an indicator, and the criteria I ascribe to it, is just there to alert me to a condition in the market).   After hitting its first target (previous day's breakdown point coinciding with the 50% projection) price formed a cup & handle pattern before breaking higher and taking out its next breakdown point (150% projection).

The 5-min chart has three up arrows in close proximity indicating probable entries.  The average stop level for an issue such as FAZ is somewhere around $0.60-$0.90.  So if you kept a stop below the most recent swing (about 90-cents away) you would have remained in the trade.  If you kept a tighter stop in the 60-70-cent range you would have gotten stopped out twice before catching the breakout, which would have covered your losses and then some. 

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