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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: Rattle_Shot who wrote (4943)	7/28/2005 12:56:55 AM
From: chowder	Read Replies (1) \| Respond to of 13449

Rick, USU isn't your classic 3 bar drop set up. The 3 bar drop is coming off a double top pattern. The problem is the congestion that formed about 2-3 weeks ago. Price is actually consolidating sideways. This is the sort of set up that requires one to wait for the break out above $16, as opposed to buying now. The reason? Reward to risk! Price has failed to break out above $16 twice now. It is a level of resistance. Price is currently at $15.30 and the 3 bar drop set up requires one to buy about 6 cents above yesterday's high of the day, to insure upside momentum. Since the high was $15.64, your entry target would be $15.70. You have 30 cents of upside before running into a resistance level that has failed twice in the last 3 weeks. This would be a high risk trade with a low reward to risk ratio. To make it a low risk, high probability trade, one would need to see price break out above $16 with a pattern similar to what RRI did yesterday. stockcharts.com[h,a]daclyiay[d20050427,20050727][pb50!b20!f][vc60][iut!Lah12,26,9!Lc20]&pref=G Note that I'm not saying price won't go ahead and break out on the next attempt. All we are trying to do is identify set ups that present a higher probability of success. Trades that minimize risk yet present a decent reward. dabum