Apple: Channel Breakdown, Negative Divergence
It's been a while since I've posted. I think this is just about the longest I've had in between posts. Part of it is that I don't want to put up posts just to have something posted. I'd like to have some real value behind the content, which could actually serve as an example and demonstrate something useful.
Posting will probably remain a bit slow until the Olympics are over. I'm also trying to get more reading done (both medical and trading related).
Anyhow, here's a channel breakdown example on Apple.
We'll start by taking a look at the daily chart.
Here's a 20 day view of apple with 15 minute bars. Notice how there's a trend acceleration (light blue channel) inside a primary trend or channel (purple channel). From my previous posts on channels, you'll notice how the channel lines tend to serve as support/resistance.
Finally, here's a 5-6 day view of that same chart. I've zoomed in to try and identify what I was seeing take place over the last week or so before I took a short entry.
Most of the annotations are on the chart and I hope it didn't get too cluttered. I wanted to try and point out as many things as possible as I felt there was quite a bit going on.
I think AAPL can put in a bit more downside here, and I may be looking to reshort on a low volume pull back higher.
Question -
1. Why do you use the 130 MA? That seems like an odd choice between the widely used 100 MA or the 200 MA.
2. Those andrew pitchfork lines, is that part of the ToS program or are you just using duplicate lines from the lows and bringing them to each swing?
Anonymous said... August 18, 2008 at 10:48 AM
Oh and one more -
3. Why did you choose to short below the first 15 min bar as opposed to say 30 min or even 5 minutes??
Anonymous said... August 18, 2008 at 10:51 AM
Ted,
1.) The 130 day moving average is basically equivalent to the 5 day moving average on the 15 iminute chart (there's 26 15-minute periods in 1 day, and 130 15-minute periods in 5 days). I use that moving average similar to how Brian Shannon @ AlphaTrends does.
2.) They are channel lines and not pitchfork lines. I'm not an expert with pitchforks, but I do understand they can be different as pitchforks have an anchor point. These are channel lines through prophet charts, which is available through ToS.
3.) I shorted below the 15 minute bar because essentially most of the opening range emotion has been cleared out in the 1st 15 minutes and a break below that bar is techinically significant.
Trader M.D. said... August 18, 2008 at 11:55 PM
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