Wednesday, November 05, 2003
Harmonically, a hum dinger of a day
For traders using geometry (bisects, Fibonacci, patterns), there are some days that come together just right. Today was one of them. This piece focuses only on the moves after the opening flush.
Click here to open the chart in another window (easier to follow the comments)
The chart below is a 1000-Tick chart. I actually trade off a 400T or 550T chart using a 150T or 266T chart as a finer vernier. However, I couldn't make the 550T chart "small" enough and used the "Lock Studies" feature in Ensign to leave my studies from the 550T chart on the 1000T chart. Pretty nifty.
The colorful band at the between the price & indicator pane are equal-hour bands. Tick volume is not constant in time and this band gives some insight into trade volume. Short bars mean very little trade volume (more risk) whereas longer bars indicate good liquidity.
Bisects: [1] There was an early "yellow" bisect that let me know when the trend changed, confluent with a tradeable RSI divergence.
The blue bisect was drawn in at the 13:55 reversal. Remarkably, this bisect would prove useful for the remainder of the session.
Fibonacci: [2] The reversal at the low allowed me to sketch in possible Fibonacci retracements from the fall off the morning high, which I use to aid me judge the strength or weakness of price moves.
[3] The first move off the low to the .382, where it reversed, allowed me to sketch in a smaller Fibonacci retrace of *that* move, which along with rising RSI/MACD indicated a low risk long entry.
Patterns: The Low, and next two reversals, allowed sketching in the first AB=CD [4], which reversed just shy of its 1.0 target (1048.75), which itself was a confluence with the 50% large Fib, and the 25% inner parallel of the blue fork. Not exact (the angle of ascent was also a tad too sharp), but coupled with a negative RSI, a good pullback signal.
Not shown (there are already too many lines) is another mini-Fib of the short leg, which showed a 50% pullback, confluent with the .786 level of the prior leg.
I don't pyramid my intraday trading, but this reversal was a low risk long for another trade, and the place to add the second AB=CD pattern [5], which was confluent with a spike touch of the lower ML.
This was the most exciting move of the day, moving very rapidly, and consolidating just above the AB=CD target, within a quarter point of the big 61.8% Fib. While still strong, intraday for me is more about getting the meat of a move and not drinking the last drop out of the bottle. That was my last trade today.
However, for real party goers, the Positive RSI Reversal (aka "hidden" divergence) [6], along with a
WILD EPREM move signaled the end of day fireworks, engendered by the anticipation of the CSCO earnings report after the 4pm bell.
All in all, one of the few days where so much comes together. A day to savor but to not "expect" again as in my experience, it doesn't happen this way that often!
By the way, the lines were (1) cleaned up a bit (eg, took out the extraneous Fib targets that weren't touched) (2) not as confusing when trading in real time as the chart is larger and the old stuff "falls off".
Labels: chart-analysis, indicators
