Homework 09/27/07 – Support – 1
Sep 27th, 2007 by Trader-14
GDX – Daily
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Trade did not trigger as stock moved up on a gap. At this point, I would move my buy order to the 20MA currently at 42.10
Tony: Do you have a time limit for your buy order or not?
Tony,
1. I am curious why you moved entry to 20MA ? BTW: 20MA happens to be around 62% retracement (using High at 21Sep , Low at 10Sep).
2. If you have just found this (for the first time) after close of trading on the 27Sep, would you still look at 20MA as the entry ?
Great questions Trader 9 and Trader 15. My buy order is if valid if GDX fails to make a new higher high, the reason I have the buy order at 42.10 is that it would be where I would expect Double-Top “shorters” to cover their shorts. A lower high will normally mean that the lows at 43.40 or so will be most likely tested and taken out, so the original buy order at 43.80 with a stop at 43.15 would be too risky for me. So in short, the comments were made for the day it gapped up and limit order did not fill. Once it moved up some, you don’t want it back at the same price as it will often move lower, so this is why I moved the entry price to 42.10. There is a lot of support there from previous consolidation, from 20MA and fib retracement.
As of close on Friday, I do expect the stock to try and breakout. If it does, then the buy at 42.10 will be a gift if it goes back down therein the next month, if it doesn’t then 42.10 is still a good trade for support entry. So either way, I still like 42.10 as an entry for this stock.
Well, GDX is at the 20MA today (which is up to 43.20 from 42.10)
Failed breakout gives a pullback to the 20ma which was the top of the channel several times before it broke out to 46. Ask in class for further analysis.