Finding trades at specific areas inside the trend II.

On part 1. I explained how to identify and find entry on five high reward, low risk long setups betting on a move higher: Two were in a clear uptrend with some variations you'll find in a real trading environment, two were in transition with bias higher and a bottom fishing one that looked very risky but wasn't because the larger time frames TFs confirmed that reversal.
Click here for that lesson:   
http://chalannn.blogspot.com/2014/02/finding-trades-at-specific-areas-inside.html

******Print some charts, FIRST analyze them, then paper trade them and see how they work for you.*****

In depth trend and pivot analysis click here:
http://chalannn.blogspot.com/2012/08/pivot-formation.html 

Lets find five more trade setups inside the uptrend: 
Warning: This lesson requires more advance trend behavior knowledge.

The question remains when and where in the chart do you enter the stock your neighbor told you about being the next AAPL. 
Can you enter any time and any where on the chart and hope that you were born with the Midas touch?

For the rest of us not born with the Midas touch, if we want to place a trade trying to capitalize on a move higher or going long: 
Realizing that price moves in a wave like motion inside normal up trends, forming higher highs and higher lows, we just need to identify the most likely area where price will initiate the next surge higher and enter the long trade. 
After we check for some chart nuances that can really help increase our odds of successes if we understand and apply them, such as these.                                                        The same checklist:

1: Monthly chart keeps moving higher with small green candles.
2: Weekly chart is preferably in an uptrend beginning another  
     move higher after a controlled pullback or had a long rest at    
     resistance and is ready to move higher.
3: The daily chart at a minimum needs to be transitioning with
    bias to move higher or in a confirmed up trend. Other 
    opportunities will present but only if other time frames confirm.
4: Needs to have a controlled pullback of 1/3 off that impulse.   
    Above and near its rising 20 MA. Forming a higher low
    pivot HLP. Or set up bar in the form of a narrow body or     
    a bottoming tail. Near support. Avoids set ups with big lower 
    opening gaps.     Trigger: Price trades over set up bar.
5: Is the market where the stock I want to trade/ invest    
     up trending and ready to move higher? Because most stocks 
     follow the markets they're in. This one is a must have 
     requirement to be on my list.

On the chart above the daily chart was very extended but the pullback was controlled and small enough to form a higher low HLP. The monthly and weekly charts favored long trades.
I see this setup all the time, the entry does not meet some of the requirements on my list but with a small stop one can ride another move higher, don't ever argue with the action as long as the uptrend remains clean. A lower high same TF. Will signal the big exit because it might be the last surge higher.
The transition with bias higher on the 60 minute chart was the signal to enter. 
For exit a 2X top or one last massive green candle and massive volume on the 60 minute chart exhausts the longs.

On this set up the pullback was deep, looks like 50% of the big impulse, If the pullback is greater the 40% one has to do a better price analysis: Price was in a clean uptrend from a base breakout, on support, at rising 20 MA. Had a bottoming tail possible setup bar? The weekly chart just broke out to new highs and closed strong. 
The tie breaker was the 60 minute chart, if price moved lower out of the base it was forming then the daily would keep moving lower.

The 60 minute chart did move lower finding buyers immediately, triggering a violent move in the other direction turning the larger time frames higher.
Entry: Was the breakout of the 60 minute base. Stop exit: Low of bottoming tail on same time frame.

The next setup was sort of a cup and handle on the daily chart, the monthly and weekly charts were on the side of longs, the daily chart had a controlled pullback above R20 MA. Formed a set up bar and exploded higher, the only entry signal was on the 60 minute chart, it had four higher lows.
Entry was the break out on that TF. Exit: Below the setup bar on daily chart.

On the chart above, price had no visible trend judging by the flat 20 MA. Slightly above the 50 MA. It did not meet 1/2 the requirements I needed on the list to take a long trade, move on right? Well, no.
Most of the time I'll move to other setups but not this time.
What I liked about this set up on # 1 Is that it retraced 100% the drop and stayed there having a four day bullish consolidation above the 20 MA. After that it drop 1/3 To form a bottoming tail set up bar.
Three days later the pullback on the 60 minute chart had a similar looking pattern as the daily chart, the entry was on the break out of that base.  Exit: Bottom of that HLP.
The daily chart was signaling this trade, the weekly chart was neutral.

The following examples will test your knowledge of trend behavior.

The weekly chart was forming a double top. The daily chart was in an uptrend but had a hard pullback above its R20 MA. Followed by a 50% bounce to the top that established a HLP.  Then ran out of buyers pushing price lower forming what looked like a LH. Setup bar and putting the uptrend in question. No more uptrend.
I wrote before that on deep pullbacks it's better to wait for the reaction to the first bounce, if the move lower is weak and if it forms a HLP. After that, to look for entry then.
 

Having a trend in question doesn't mean that price will collapse, it can be a pause because price got way ahead of the 20 MA. As long as the HLP. Doesn't get nullified with a close below it, basically expect the defenders of the trend to defend it with passion for the uptrend to be re established eventually, and they did on the test of that HLP. Price bounced back.

Next day another test found buyers, price bounced back again seen through the hourly chart. 
Triggering a big green bar and HL Double bottom that nullified the LH Setup bar and the down trending line on blue on the daily chart. The weekly chart was forming steps higher on the last two wicks.
Remember that if the 60 minute chart can't establish a downtrend the daily and weekly charts will not go lower.
Entry: Very aggressive on the matching 60 and daily chart TFs both forming double bottoms (red arrow) Exit stop: Under HLP. Because  the last HLP. Gets defended inside a normal uptrend.

Two days later the uptrend re established. Remember that a LH. Inside an uptrend only puts the uptrend in question, but if the selling is weak the odds are high that it's only a rest and price will resume with the uptrend once sellers are out.




One of the points mentioned on the first lesson was how to recognize when an uptrend is in danger of suddenly changing:
1: A big lower gap openings if not closed the same day.
2: A violent drops as was the case on the last four charts where the big drop signaled that big money got out and now professional shorts will wait for the bounce and if less that 70% they will let it form a setup bar to pivot lower and short for the beginning of the down trend cycle.


Under this condition if you want to go long the test of the HLP. The odds are high of a 50% technical bounce only to pivot lower.
Because the stock for some reason lost its big money support. Don't get too greedy.

There you have it, five more great long setups, strategically looking for high reward low risk entries inside the trend and it work for shorting as well.
I which I had read this lesson 15 years ago. 

******Print some charts, FIRST analyze them, then paper trade them and see how they work for you.*****


If this lesson doesn't make any sense to you, read the first ten lessons on this blog, because they explain in detail most of the method of use to analyze any stock in the markets.


Feel free to leave a comment. 

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