Trading Strategies
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Continuation of Bull Trap
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Trading Strategy:
On Day 1 "A" closed with a Bullish Wide Range Bar (+WRB) off a rough "W Formation." That was a bullish pattern, setting up for a move to the prior high. Next day, however, it opened relatively flat and closed under Day 1's low, constituting a Bull Trap. Because of the big advance in January, if the prior support area is overcome, there is little demand to halt a move down
chart courtesy of Mastertrader.com
Tip:
Trading under the low of a +WRB is a bear trap, trapping the bulls who did not sell, suggesting lower prices.
The Play:
Sell short under previous day's low ($33.62), with a protective stop over previous day's high ($35.00).
Objective:
A move of $1.75 to $3.00 .
MEDIUM RISK
Play Review:
A triggered short and exceeded the higher $3.00 target. Nice trade.
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