June 28, 2011

How to trade a Failed Pattern

  • ONGC's Head and shoulders showed how a failed pattern can give a fast move in the opposite direction.
  • After breaking the neck line there was no big breakdown. The Long Shadows of the daily candles gave a hint of the reversal.
  • When price reversed above the neck line it was time to go long and longs gave good profits.
  • So when a pattern fails have plans to reverse your trade.
  • Long Shadows often shows reversals
By at

4 comments:

  1. niftyJune 28, 2011 at 1:04 PM

    Awesome !!!

    ReplyDelete
  2. SanJune 28, 2011 at 1:13 PM

    @nifty

    Thanks

    ReplyDelete
  3. niftyJune 28, 2011 at 3:02 PM

    San,

    It is a pity that not many heeded to this warning by clinging onto their bear holdings.

    "When price reversed above the neck line it was time to go long and longs gave good profits."

    Hopefully the next time around, they wouldn't be making the same mistake again.

    ReplyDelete
  4. SanJune 28, 2011 at 3:12 PM

    @nifty
    A Mechanical system like JNSAR will solve this problem of emotion. When we are wrong and market is telling us that we are in the wrong direction we should either get out or reverse the position.

    So a Mechanical system will take this emotion away. You let the system take the pressure and watch from the sidelines, fine tune the system and never be emotional. If you do that you will never face big losses.

    ReplyDelete

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