Friday, March 30, 2012

triple top: bottom VOLUME BLOWOFF

The top was fast -- the big triple top completed just as the bell rung at 9:30  -- and then it was 100 ticks down.  Not bad.

Today's learning lesson is how to get back in.  First -- we need to see big PUKE candles which is the big stops being taken out.  There were several.

 But that's not enough.  Finally, the trendline broke and that would be the first time to enter - and as it turned out... the market rallied back 60 ticks...  

 Knowing it was  Friday, end of quarter, and the Market Signals were not bad (xhb, xlf, iyt, slv) -- there was no doubt a small rally would ensue.

 So when trying to catch a bottom -- the key is looking for big volume blowoff candles and then a bit of stability -- or simply take a first stab as the trendline breaks.  The key thing is -- do not try to enter early -- you just set yourself up for failure -- and will end up getting caught in the PUKE moment. 

 You enter as the order flow changes and then wait for the next resistance area to be established and reverse.

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