support and resistance
Amylin Pharmaceuticals, Inc. (AMLN)
Tried to short AMLN but support in the 17.55 area held. I didn’t even know there was support there. Do I sound clueless or what?
Had I looked at the 30″ chart I would have seen it, or even the daily for that matter.
Price was perfectly supported but I was trying to fade it.
It’s easy to see that traders didn’t have reason to short it with me. Market was recovering from heavy losses starting from 1:45pm. So even though the market was ‘down’, it was heading up all afternoon. The market was clearly trending up.
The market didn’t care that I just wanted to make some money. It was making a minor move down when I entered, but soon continued its strong uptrend into the close.
Not a good idea to short stocks when the market is in a confirmed uptrend. It was irrelevant in the afternoon that market had sold off in the morning. The mood on Wall St. had changed. I was just looking at my fabulous 1min candles for signals, on the 5″ I really didn’t get confirmation. I thought a bearish engulfing was forming; I anticipated that it would complete but it never did and AMLN went on to make new highs.
I had a very tight stop as it was the end of the day and I wanted to keep my daily profits which I did.
Daily bars were in congestion.
If I compare the AMLN daily bars to the ESV daily bars, I can see that when I shorted ESV at 42.92 at 11:44 this worked much better. Inspecting ESV’s daily bars, there is congestion as well which is why there wasn’t exactly a free fall to my price target.
The main reason, though that ESV short worked and AMLN short didn’t was because during the AMLN short the market was trending up, working against the trade. ESV was in the morning when the market was down in the dumps. AMLN trade was at end of day when market was roaring back.
One other observation. ESV burst up more violently. AMLN rally was much more orderly, and profit taking along the way meant that there was no build up of sellers. By the time I entered short, bears had already taken profits. In other words, it was not a spike up starting at 2:00pm, it was an orderly trend. The ESV successful shorting worked off an emotional spike with topping tail while the market was still down in the dumps.
That’s the difference between the ESV successful short and the AMLN short which didn’t work out.
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