Jun 13, 2007

FCX - Long

If every stock acted like FCX acted today I would be writing this blog on my 120' tricked out yacht in the British Virgin Islands... Virgin Gorda to be exact. But they don't... so here I am in front of my very untricked out Dell desktop. I can dream, can't I? Here's the trade:

  • Placed fib. levels from first bar low to 3rd bar high
  • Price retraced down and bounced off the 50% fib. level
  • The 10:15 candle formed a perfect hammer right above the 61.8 fib. level with increased volume (if anyone can write code for this kind of formation please let me know). I entered off the high of this candle
  • Price consolidated at the OR high and finally made a push upwards
  • Exited during the 11:45 candle, right above the fib. ext.
Hope you all caught some good trades.

9 comments:

Flatwallet said...

Oonr7,

Do you mostly trade Hammers. Assuming the price and volume action meet your requirements.

LP

bl said...

Nice work with the 5". Similar to 5/10". Also double fib levels from yesterday's close to OR high...a likely reversal point. I don't usually trade nyse stocks, but many times they
have the biggest point moves...high price stocks.

OONR7 said...

@flatwallet: no, not really. But my entry bars usually do not have much of an upper tail (long) or lower tail (short).

@bl: I try out your method during the day and saw that the levels pretty much aligned the same.

OONR7 said...

flatwallet: let me add, if I see a hanging man after a long run up at a key resistance area, I will short the low of the hanging man. So, sometimes I do enter a short with a long lower tail. But for longs, I usually do not enter if it has too much of an upper tail. And... I want to see an increase in volume over the previous candle on my entries. So, if a hammer forms in a nice spot but there's not a lot of volume behind it... I'll hold off.

Flatwallet said...

So this is what I understand:

Long Entries:

Modest but not climatic volume that creates a hammer.

Prior bars should not have long upper tails.

Prior down bars should have descending volume bars.

Best case if close of hammer is above the 5 ema but not extended from 5 ema.

Enter over hammer highs.

Short Entries:

Inverted hammer or hanging man on modest but not climatic volume.

Volume should be light or have descending bars on rising prices (bear flag like).

Enter under inverted hammer or hanging man.

Exits: Prices should not be too far extended from 5 ema or moving avg of your choice.

Careful on wide ranging bars.

Volume should be above average during the trade but not climactic.

Climactic or high volume along with narrowing spreads could spell the end of the move.


Let me know if I have missed something. Btw, most of the same rules would apply to say doji's as well right?

OONR7 said...

@flatwallet... most is accurate. However, I don't always enter long with a hammer. Could also have a little upper tail, but I want it to be a very strong up bar (vice versa for shorts... strong down bar). Also, don't forget about the fib. levels. I usually go long on an entry bar above the 61.8 or 38.2 levels. This is key and if a hammer forms below these levels, I wait as there could be a reversal. I also want volume to be higher on my entry candle then the previous candle.

I like what you wrote here: 'Climactic or high volume along with narrowing spreads could spell the end of the move.'

This is especially true near resistance (for longs) or support (for shorts).

I try to incorporate X's exit strategy and if the low of a bar falls below the 5ema (for longs) and the next bar takes out the low... I bail.

OONR7 said...

the OR highs and lows are important too.

Flatwallet said...

yeah...agreed and agreed...

Well, the paint is drying and grass is growing right now so I figured I might as well get into some witty banter.

I usually get out when the volume on my entry bar is lackluster.

Oh...and I've been meaning to ask you...are most longs above the 61.8. What about shorts, under 38.2?

OONR7 said...

regarding the fib. level question... it depends how you draw your levels and what direction you're going.

With FDX, I drew the fib. levels from low to high (direction of the move and pullback). So, I would look to go long at the 38.2 level and short below the 61.8.

With ROLL, I drew it from high to low because of the first bar. So, in that case, I would look to go long above the 61.8 level and short below the 38.2 level.

I just depends how you draw your fib lines. I guess you can always draw fib. lines the same way every time and use 38 for long and 61 for short, but I've gotten used to my method already.