Did you read the post from Sunday? Have you taken note of the importance of inside bars? Posted here, here, and here as well.
As we noted, Inside Bars represent an equilibrium – bulls could not take us higher, and bears could not take us lower (than the prior time frame). A tug of war if you will. The break of these equilibrium’s are often that final tug that the respective bears/bulls need to propel the next move. Look back and any chart and start analyzing the importance of inside bars – quite possibly the most important (and under-utilized) aspect of technical analysis.
Notable inside week breaks:
GE, AMZN, NVDA, GOOGL, MSFT all broke their inside weeks and made new 52-week highs. Grade A setups that paid very well into Tuesday.
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Good stuff. I like your work.
I think I get it. Using AMZN as an example, in your estimation, what was the correct entry? (Wait for it to break above the 12/6 candle top of $677.91?)
Had it instead broken beneath $641 (12/6 candle low), was it a short?
Given the current state of the move, within the larger uptrend, what would cause you to sell?
Does sentiment ever enter the decision equation?
Special circumstances like year end?
Graystoke:
Your long trigger would be the weekly high from last week – 669.90.
The short trigger would be below last weeks lows of 656.63.
As far as selling, it depends on your capital constraints and risk tolerance. If it was me I would have closed my position yesterday around the close, because it was a huge 2-day move and I don’t want to hold overnight – but I am also a very active trader. If you’re a swing trader, you can sell some – but MAKE SURE it does not fall back in to the prior weeks range (<669.90). If it falls back into last weeks range, we are then seeing up a reversal signal.
As far as sentiment, I only trade price and that's it. YE markup, profit taking, etc. does not matter to me — it will be displayed in the price action.
If you have any more questions hit me up on Twitter @varelresearch