nflx today--how would you know it would reverse this am?

So how would you know the gap wouldn't hold until it has already backed up? In my practice I got in at 10 but by 10:23 when i exited it was ugly....I know based on the first 55 candle of the day that that is bad, but I was already in the trade. Just looking for advice in how to avoid this in the future. Initially the adx was strong on the 21 and 34 and you had an E on the 10 and 21 so what did I miss? thanks

I am not the best to respond as I am learning and practicing Darcy's style using short charts and the "E" when time permits for summertime trading. I am more of a big chart guy. That said I will offer my two cents regarding some clues to be aware of on NFLX (as I see it). Take it in context of your own trading style and any other feedback offered. Looking at the whole picture.

Weekly - still trending up but there are signs the trend may becoming to an end. Maybe not ready to turn on a dime but getting weak. Cannot really elaborate much on weekly and my reasoning but there are those reading this forum that will understand.

Daily - moving sideways, indicators weakening and showing signs of crossing, near TBB with little room to go. Definite sings that daily is weakening.

233 - pulled back to middle BB, BBs contracting, indicators weakening, gapped up and move up just outside the bands around the open - very little room to go.

55 - nice gap up with HRFP on first candle but it had not closed. Again outside TBB - no room to go.

34 - again nice gap up but outside TBB with no room to go (considering this and larger charts at, near, or outside TB

21 - nice gap up but also provides your first indication to leave on the second candle that would close around 10:10. You are outside TBB on this, 34, & 55. You are outside TBB on 233 with no room to go, near TBB on Daily with little upside potential and indicators weakening. The 2nd candle on 21 is a major reversal signal discussed by Steve Nison (and I believe Stephen Bigalow touches on it as well). The fact that it happened outside of the TBB gives more weight to the reversal signal.

All of the above, especially the fact that larger charts do not show me enough room for upside potential, give me reason for pause. If I had been attempting to squeeze out a quick trade using the short chart E set up then the 2nd candle on the 21 would have caused me to exit around 10:10 w/out hesitation given the entire picture. There is no way I would have known the gap would not hold but my experience suggests there was more downside potential than upside. To stay in this trade I would have needed follow through on the 2nd 21 and a continuation up that started to expand the BBs on some larger charts.

NCT

I can't say... "I have never traded gaps off a 55" however speaking generally if I do not have a gap on my daily I do not consider that to be a signal for a trade in the direction of the gap.

The 55 chart in this case looks like an exhaustion gap. It came after the stock had already had a large rise up.

Look at the gap down on 7/21 - 7/22 on the open on the 55. Now look at the MACD "comb lines" compared to the comb lines on the open of 9/3. 9/3 is telling you there is no mojo in that trend. Look at the huge candle open on Aug 11 but the MACD is saying "DO NOT TRADE"...see the small comb lines?

Your 10 E chart shows MF already too high. Like Stoch RSI watch that over sold/over bought area.



Edited 1 time(s). Last edit at 09/05/2014 02:00PM by Darcy2.

Thanks so much y'all. I am going to go back and pull the charts up now that the weekend is here. Overall it was a good week for aside from that trade. Did a nflx put yest that worked great and then a tsla put today that worked as well. I will eventually dabble with real trades. Life is a little stressful for my husband at work and that tends to seep over into life when I trade and feeling like I have to figure this out in case he quits his job. So I am trying hard to be wise in real money trading. I need to do a few trades where I just get up a pint and out.

ONLY KIDDING OKAY??? I couldn't resist!!

bugabiga: "get up a pint"

Do Not Drink and Trade! Sorry couldn't help myself...sorry.....

Just saw that Obviously I didn't check that one....

Bugabiga...I never check spelling...and maybe I should. I usually end up a lettr off...