Thursday, September 24, 2009

When Breakouts Turn False


The recent lows in ES were achieved on lower volume at the bid (bottom blue arrow). As noted in the intraday tweet, we also saw non-confirmations of daily lows among the NQ index and the XLB, XLV, XLY, XLP, and XLK sectors. Those non-confirmed breakouts often become false ones, as sellers are forced to cover positions on failure to sustain the lows.
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4 comments:

ClearAir said...

The second excellent call in as many days Dr Brett.Keep it up!

BrettB said...

Very interesting...

Matt Fahmie said...

Dr Bret:

That might have been a temporary failed breakout, but I believe the fact that we could not close above 1047.75 could lead to potential continuation tomorrow. The move off today's lows showed no follow through, because of the significant resistance above. I do a more detailed analysis in my video. I would be honored if you took a look at it. http://tradeorderflow.blogspot.com/2009/09/live-trade-and-tutorial-of-failed.html

meques said...

non-confirmation with sectors as well as volumes occurs numerous of times per trend day or like-a-trend-day pattern (like today; slow downside move under sellers pressure). is placed at #1 from 5-7 signs calling for trend day breakout or just a finish of prolonged move, respectively. i persanally, entering only when 2-3 signs have showed up.

if i have an opportunity to trade today, i would enter long at 1043.5p on ES at 1445 ET when ES pullbacked to 20-50 emas on minute chart after:
1) nq & 4/8 sctrs didnt make lower low;
2) 20ema crossed above 50ema m1 (but yep, it was already 2nd time happening since open bell, at that time, tho);
3) and nyse tick posted fresh session high near +950.