In the current market, I am seeing that stock moves don’t seem to have much momentum behind them. A stock may break out of it’s channel for a short time, only to have it go back into that channel. One thing a trader can do is to pay attention to the opening range. Different traders use different time frames for different strategies.
Some use the first 30 minutes. After 8AM MST, I mark the charts that I am interested in by a horizontal line at the high and a horizontal line at the low of the time period beginning when the market opens to 30 minutes after open.
If a stock seems to be breaking out of it’s pattern, yet has not broken out of it’s OR, I don’t trade it. If it breaks the OR, that is one sign of validation that this stock may have the power to continue to break to new highs or new lows. If it breaks up, we buy calls. If it breaks down, we buy puts.
Trading Coach Jo clients back test to see if paying attention to the OR would hae been a good thing. Check it out for your trading practice. Let us know what you have found.