Due Diligence
Sometimes I honestly wonder
why I even bother to deviate from what I know to be consistently rewarding.
In today’s trade, I mentioned a stock that was
breaking an intraday downtrend line after testing daily technical supports. For
some traders, this is definitely enough technical evidence for a trade with edge
to be considered, but for those that like pattern reversals, this was only the
beginning of a consistent, high-probability trade known as the 1,2,3
formation.
In our members’ chat today, I mentioned that
FreeMarkets
(
FMKT |
Quote |
Chart |
News |
PowerRating) had tested a pivot from August, setting up a double-bottom daily test. This low also lined up with a 127% price projection of an AB
= CD leg from the September and October highs. With the intraday break of a
downtrend line off daily supports this is considered by many technicians to be a legitimate entry to
initiate longs, so I felt it was appropriate to ‘put it up’
in our room as such. But, for the pattern reversal player, this was only the
beginning.
It was off the 1 point low that I first mentioned
FMKT in today’s trade as a potential setup. It then went up once again within
our room as a retest of lows was taking place, and a potential 123 pattern was
emerging.
Within our site, I like to put up as much as
possible in an attempt to please as many folks as possible. I also like to
concentrate on setups that make sense to me. But, with that being said, the
thing that still makes the most sense are the well-developed setups that
consistently reward the patient trader–and for the reversal players out there,
in my humble opinion, the 123 is still one of the best plays out there for a very
good reason.
‘Well, look at ‘dem apples.’ FMKT might have been
in a freefall of sorts, but look what you could have picked up off the 3 point
and reversal pattern low…absolutely delicious.