Here’s what NO OPPORTUNITY looks like for a fade and I’ll tell you why!
Third candle, a doji, seemed to create a top much like pin bars often do. There was a slight turn down in momentum (second subgraph) but really I don’t feel like we had enough data points to determine a breach in momentum.
Stochastics (bottom subgraph) didn’t substantially breach the overbought area.
The doji was a near rickshaw and it’s lower shadow approached 38.2% Fib. Once 38.2% was touched, you can see there was a bounce. I suppose traders had orders long orders in at this level.
Candle #13 I would classify as neutral. Although it breached SMA(9) it did not close beneath it which cancels evidence of a reversal at that point.
At Candle #15 one would have to redraw the Fibs as a new high was reached.
But with all the volatility, if you waited for Candle #15 to complete there wouldn’t be much meat to pick up before 50% Fib was touched (that being a reasonable target).
The next drop, candle #17 was bearish alright, but by the time that printed price would be very close to the 50% Fib and so not a good entry.
Basically the upward explosion reversed into sideways choppy motion.
Events such as doji, bearish engulfing pattern, breach of overbought, breach of SMA(9), all occurred but there was no confluece to signal an entry.
For example: our third candle (bearish or nearly richshaw doji) was not in star formation and the candle afterwards certainly was not bearish confirmation of a trend reversal. (I actually played that event, so sure of a quick reversal and an even quicker buck).
It’s just not enough evidence — in fact it was NO evidence. It was an indecision candle.
Timewise ten minutes is a microscopic move. A bit too challenging even for me.
The bearish engulfing pattern may have attracted novices, but there was no penetration of SMA(9) and even if there had been the close of the candle already was like a 33% retrace to the beginning of the move up. That’s because the move up was so short-lived. There was no follow through on the original move up.
38.2% was fantastic support. Why I took another short I’ll never ever know.
I was feeling so overconfident by the last few days that I stopped carefully analyzing.
Then I took a third short! I took the short when 38.2 was violated but it bounced hard off of the 50%. I had succeeded in shorting at the bottom of the move.
I need to have more respect for support and resistance.
If I’m short, perhaps I need to see the longs as the other team. Players probably had their buy orders in at the 50% for a long time. I sold them my shares so they could beat me.
At this point I was a bit annoyed, had three losses in a row but kept trading. That was a bad mistake.
I have updated my Trading Plan to avoid all this mess.
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