Here’s Why You Should Look For A Breakout Failure
You probably heard it
too many times: “Don’t fight the trend.”
09:54:04 (from TradersWire) The clock is
three minutes fast.
|
Action |
Symbol |
Order Type |
Setup |
Stop |
 Target |
Current Price |
Posted By |
|
Sell |
IBM | sell stop at 74.29 | near intraday resistance | 74.49 | 74 | 74.38 |
TK |
About 10 minutes after the open,
IBM broke out above the gap zone and formed a bullish wide range bar as you
can see on the 5-minute chart below. Why did I decide to short such a strong
stock? With the wide range bar, IBM also took out the upper Bollinger band. It
was another sign of strength. But, the very next bar was a bearish tail. I
thought the issue was ready to test the middle band. As I expected, IBM fell
bellow the upper band. A quick trader could have netted a 10-cent gain, but IBM
bounced off its 8-period EMA and hit our protective stop.
Anyway, a better short opportunity came shortly after 10. IBM moved above
yesterday’s high, but it was a breakout failure.
Good luck with your afternoon trading!
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