I'm really not good on days like today; the big gap up day (or down for that matter). The momentum should tell you not to aggressively fade and what I would consider overhead resistance makes me hesitant to put on long entries. Not to mention a momentum indicator is rendered useless (until later in the afternoon when it catches up to price). What I end up doing to combat such a dilemma is use a "gap-less" indicator, one in which the gap is muted so that it doesn't exaggerate the move. As I mentioned, the indicator does catch up to price later in the day, so I just use this indicator for the first 3-hours of the day.
So, in the chart below I've done two things;
1) I'm using a gap-less 3/10macd indicator
2) I'm using a 5-minute chart, however, the first 3/10macd has settings that reflect the 15-minute time frame, while the second 3/10macd has default settings for a 5-min chart (also the moving averages have settings to reflect a 15-minute time frame).
So I have just combined two charts into one essentially. The two down arrows reflect short entries (first exit was at $129 support while the second exit was $129.2 after the double bottom). The up arrow was a long entry (half taken off at $129.3 other half for break-even).
and here is what it looks like using a regular 3/10macd. The gapless indicator made it easier to see a more bearish tone to the price action.
All-in-all not a fun day to be messing with the broad indices. However, there were issues that had a nice trend to them.
I missed the better entry in FSLR (first up arrow) but did get in before it broke higher (second up arrow)
NFLX illustrates a good example of when to take momentum divergences. It has had a strong trend these past few days and pulled back into support on higher momentum. Exits taken around $96 resistance zone.
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 email@example.com
I am always open to questions, comments, or suggestions on how to improve this blog.