Here’s Confirmation Of A Daily Chart Reversal
I prefer to have at least two
time frames lined up when looking for potential positions.
Many technicians use a ‘3-D’ approach–which
is finding an entry based on three different levels and having all three confirm
one another. Typically, I use the 5-minute and Daily for two of the three time
frames. Depending on the stock and the pattern that I’m looking at, I’ll then
use either the 15, 30, or 60 minute chart as my third view.
When it comes to daily chart patterns that look
compelling, I’ll take a look for confirmation on the ‘higher-up’ time frames
first. If these two charts give me enough confirmation, then the 5-minute chart
is usually not considered a factor in the decision process. For example in
today’s trade….
11:48:24
Reversal Setup
eBay (EBAY)
has formed a possible Bear Gartley in today’s trade (see attached) based on its
daily chart–up 1.90 at 82.27.
So with the daily zone and pattern complete, traders might look for a
reasonable entry by drilling down the stock to the next level of
significance–in this case the 60-minute chart.
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Taking a short in eBay based on the above
reversal evidence looks compelling in my humble opinion. Will it ultimately
work? I honestly don’t know. I will say that for a sturdy pattern taking shape
with less than one point of initial risk–eBay could be up on the auction block
quite soon, with the only bids well-below Mr. Gartley’s short entry.
Chris Tyler