Quote:
Originally Posted by trav72
.......i was wondering when the price 'retraces first' as in your diagram and then it hits the 'peak', and so then, as you describe, we place another amount 'C'.
travis
|
Welcome to this forum and welcome especially to this thread on candlesticks.
I notice that this is your first post. You are asking a very intelligent question ie where is the top of the retracement?
This question is now being asked also by Greywolf238 and VulcanClassic and probably every other reader as well.
Just to answer your other questions first :
Quote:
|
At this point i would be extremely nervous that the price would continue up and i would be just doubling up my loss
|
If you have chosen the evening star carefully (long red candle etc) and checked for a "sedate" BB then the price action should go down and
not continue up. This is the whole reason for the existance of this pattern - it signals a reversal. A retracement should be just that, and no more. This is the case in about every good evening star I have traded.
You can place the 2nd amount with confidence.
The very worst that can happen is that you enter short at the opening of the 4th candle and the price goes straight up to your stop loss. If that is the case I would question your choice of evening star pattern. I have not seen this happen but have seen retraces come within 2 pips of the stop loss.
Quote:
Where would the stop loss be placed for amount 'C'?
At the same stop/loss as A or further back up......
|
Leave the stop loss in the initial position until you feel sure that you can shift it without price action doing a prompt reversal. Then move it. If the price subsequently does reverse you have lost nothing.
Quote:
How do we know where the retracement peaks are??
...............so I will post that answer tomorrow
|
.....from my own post.
So now to answer this question.
Next post.