The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
I am always open to questions, comments, or suggestions on how to improve this blog.

Tuesday, December 1, 2009

RIMM setup

Taking a look at RIMM from this morning we can see a lot of similarities in price structure, like those I mentioned in yesterday's post with POT.
First we start with the opening range gap up that was above 50% of the previous day's range.
Price rallied for 20min of the open, forming an ascending wedge. The correction off of this pattern was quick, but found volume support at the Fibonacci 78.6% retracement level (measured from the low of the day to the high of the ascending wedge).
Chop ensued, but the 61.8% retracement level held with volume (this 61.8% retracement is measured from the opening low to high) and coincided with the 38.2% retracement measured off of the previous day's range.
So, we had:
- a gap up followed by 3 higher highs and 2 higher lows before a correction
- the retracement barely tested the 78.6% level and strongly held on to the 61.8% with volume
- the pattern that price created for the first 90-min was a bullish wolfe wave/triangle breakout
- the opening highs acted as support later in the day (RbS)
So, if you're long at this point, where can we look for potential targets/resistance?
-First suspect would be highs of the morning and if we could break out of those highs next would be the previous day's high (in the $59.50 level).
-Next, we could draw some 3-point Fibonacci extension lines drawn off of impulse moves.
The first extension can be drawn from the LOD to Opening range high and measured off of the beginning of the move up.
Once we had another impulse move and correction we could draw another extension line so we can look for possible confluence levels/targets. Here's what we got:
So, lessons learned:
-Watch how price gaps compared to the previous day's range
- Watch the 61.8% & 78.6% levels (if it's a deep correction) to hold on volume for a higher low and possible test of the highs or previous day pivot levels
- Fibonacci extensions drawn off of impulse moves can give clues to possible consolidation levels.

1 comment:

Jules said...

I love fibs and waves! Very well explained, Todd. Always learning something new from you. :-)