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TOPIC: CHP starting to look attractive for the pinch. Also watch EVRN

8 years 2 months ago #190

  • evilchild
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CHP provided about a 60% gain potential from the confirmation I mentioned, and EVRN was realistically only about 40%, but EVRN is holding support and may still be in play.
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CHP starting to look attractive for the pinch. Also watch EVRN 8 years 2 months ago #189

  • evilchild
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We already see nice arcs on the PPO and ADX forming a pinch with PPO -26 and ADX +36. Personally, I like to see the ADX above 40, but this is a nice pinch forming, and Friday ended with huge volume compared to the rest of the trading day. Friday peaked out at .218, but closed down at .188 showing us a candle pattern called the Bullish Harami. The real body is small, but still a body... had this closed as a doji, it would have been a stronger reversal signal - the Bullish Harami Star.

Playing pinches for a long time now, I have learned to be a lot more patient and wait for confirmation that the bounce is developing. The danger in playing pinches is that by the nature of a pinch, these stocks are on a major downtrend with serious strength. Getting in early means you are part of that downtrend and bad entries are very common on pinches.

I am waiting for the PPO and ADX to start leveling out, and for the final signal I watch for RSI (5) to start crossing north of 30. These two things together confirm the downtrend has lost it's strength, and the RSI (5) crossing above 30 confirms the positive move should be strong enough to open the pinch. An optional confirmation for me would be on the candle reversal pattern, which is to see Monday trade higher then Fridays High of .218.

By waiting for confirmation, you lose some of the potential profit in the bounce, but it prevents most false entries (which result in a loss). With missing the initial push being part of my plan, I only look at pinches that have a very high percentage gain potential (minimum 50% from current price to the 20MA).
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