PACB was an excellent trade for me last week. I had stalked this one on daily and weekly charts but I love the 5 Min chart for an entry.
A common mistake when a stock breaks out is to chase it. But almost always that first move finds an immediate selling pressure. PACB actually dropped 5% from its high on the first candle within the next 15 minutes. I'm sure there are some frustrated traders out there who got stopped out only to see PACB rip the rest of the day closing up 19.24%.
A little trick I picked up using the 5 min chart prevents you from chasing. It's very simple, wait until the 5 min chart first tests its 6ema. A strong stock should find support in that area. By waiting for that test we take a lot of risk off the trade. We don't chase and we find out whether the stock has enough buying pressure to carry for the the rest of the day.
Nice learning post, so Scot you are using the hourly to spot choices and the 5 minute for a pullback to enter? Really shortening up the in and out. tc2000 scan: liquidity 100K, price history>1, made from scan"Price history moving up daily, Stochastic 14.4 oversold, TI-65 > 1.05,....stochastics find the extreme pullback......@7
ReplyDeleteAs you know, I use several scans to find my setups on longer time frames. Weekly tells you the big picture, Daily helps narrow that to a tradable watch list, and the hourly chart to pinpoint the congestion areas and go points. This 5 min chart setup is once the stock is in play, i.e. cleared your hourly congestion points and is "in play" and you don't want to chase.
ReplyDeletehi Scot! i highly appreciate this less. do you have a video explaining your response to the visitor? im super interested in how you do this.
ReplyDeleteyour response: "As you know, I use several scans to find my setups on longer time frames. Weekly tells you the big picture, Daily helps narrow that to a tradable watch list, and the hourly chart to pinpoint the congestion areas and go points. This 5 min chart setup is once the stock is in play, i.e. cleared your hourly congestion points and is "in play" and you don't want to chase."
I've made a few videos explaining my top down process under stage analysis. https://www.youtube.com/watch?v=kwKgNyT-tK4 But I don't think I got into entry tactics using the 5 min and hourly charts. I don't see the market as having great breakout trading opportunities right now so I would be hard to give a good recent example.
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