Played out really nice on the technicals today. I'll run through how I traded this both long and short from a day traders perspective. Then I'll run through what I'm looking at tomorrow.
The gap up open on the ASX open yesterday on large sustained volume (this is critical). If you missed the gap up open, then the first 5min consolidation was the spot for entry around 12EMA (note low volume on pullback). Stoploss would go below the 5min pullback for below the low of day.
The sell level is a loss of the 5 min uptrend (closing price) or a break below the 5min EMA12 as I didn't want to hold through hourly consolidation. Stoploss keeps moving up to each 5 min higher low. These conditions weren't triggered yesterday.
So today I know that hourly consolidation is VERY likely. I also know that momentum is very strong and there is pressure on shorts to there is very likely to be a pop on the open. I maintain the same conditions as yesterday for my sell levels. This was triggered at around AU$7.06. At this point I sell all long and go short. This short is a smaller position size as I'm going against trend (higher risk), however I know that we must see hourly consolidation. I take some profit coming into support around AU$6.90 so that I am break even if I end up getting stopped out (risk mitigation). Next profit target was 5min RSI oversold or around low of day, so covered AU$6.80. 5min RSI oversold will often signal the bottom of hourly consolidation. I went long again at this point, with stop below low of the day.
So tomorrow... I have the long position. People will look at the daily candle ad see it as a big red flag. But zoom into the hourly chart and you see that it's just hourly consolidation, so isn't a worry in the slightest. We are in fact creating a nice potential hourly bullflag and a expect we will test and probably break the high of today tomorrow. I expect another strong open. The AU$7.40-$7.50 area is then the spot to watch coming in to resistance.
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