Friday, January 26, 2007

Wall of worry

HSI is down 2% or 400 ticks today. Can't go down any further, so trade long? Forget about it, this thinking cost me 100 ticks a few months back, when I thought so myself. HSI can go down 3% or 600 as well. Just stick to your charts and trade the patterns you see on the chart.

A lovely countertrend trade pattern emerged today.

  • Market profile shows a low volume zone, meaning no additional selling pressure is coming into the market.
  • Candles are showing a bottom with the first low holding and the close of the candle around 20295
  • CCI is showing a kind of inverted H&S pattern at the -100 line
  • The Stop is 20 ticks, which brings it below the bottom made. The target is the high volume zone above at 20340-50. 
  • Risk : Reward for this trade is 1 : 2.25

Can't ask for a lot more and something I will add to my repertoire of countertrend trade patterns