Post by Admin on Mar 29, 2015 13:37:29 GMT -5
( Click to Enlarge)A: MA tested and held support at the 87.70 area (circled) 4 times and held then it firmed up on the 5th test, on the 18th, an moved higher.
B: I entered the trade on the 19th with the MA April 90.00 Calls looking for a test and a break above 90.00 on volume.
C: By the time the test of 90.00 came we had a small profit but the failure at 90.00, evidenced by the increased selling at that level, pushed prices back down. At this point, I noticed the momentum was shifting and that we would end the day in a "stopping" pattern or what is typically known as a "Doji" day ( sometimes you can see a Doji forming even before it does when you study price action & volume long enough). This pattern signaled a coming change in momentum/direction so I sent the alert to close the trade and then closed out my positions shortly after. This saved us a lot of money.
In retrospect, I could have gone short/bought some Puts at the same time and took advantage of the downside. I didn't do this simply because I wasn't comfortable that there would be sufficient follow through. One of my many trading rules is " when in doubt you should get/stay out".