Fade Gap Up After Tight Range Trading Friday

 @ibtimes on July 20 2009 10:08 AM

The tightest trading range put in for the previous seven days is known as NR-7, and trading the day after such a day can provide good percentage trades. When the market gaps up after an NR-7 day, a fade off the open has an 85% success rate, so we are going to look for such a set-up to trigger. The market is strong as good earnings have proven to be catalysts for a move higher. Shorts have looked to cover after initiating positions for a move lower off the head and shoulders pattern in the market. Be sure the market foreshadows the dip before getting short in this unique environment. Still, look for a retracement after the recent strong move.

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