Actually, I did consider re-opening my short as it gapped up to the top of this channel:



dl.dropbox.com/u/20815047/TSCOdailychannel10_01_13.gif

I had considered placing my original short stop above this channel but felt that 351/353 ought to have been strong enough. I think there's a good chance of a gap down tomorrow if the FTSE closes below 6106.

wait for the gap fill to enter long.
This gapped above strong resistance so chances are it will become strong support.
the gap fill level is at 353 and the level with strong support is at 351.
On the other hand if it gaps down tomorrow then bets off so maybe watch what happens tomorrow just incase for an island.
im always extra careful if its the third gap up.



dyor

You consider going long on this Jackozy? I'm tempted to invest for a longer period now but I was hoping to get a better price.

This gapped up over my stop so I'm out for a loss now. Time to walk away...

False breakout maybe

I'm short on this too mate but if it does close and stay above 351 resistance I'm going to consider investing in shares for longer term.

Also its a good thing if you are making me think hard. The steam will clear out the dust and cobwebs

Hi Amo,

Yeah, sorry about that. I knew it was a bit confusing when I pressed the submit button but hey ho - a bit of thinking never did anyone any harm

Keep an eye on where this closes today. It's very early but there's a good chance of a shooting star right at the 351p resistance as it's looking now. FTSE's also been close to major resistance of 6100 today so could help us.

PS My limit order got hit so I'm already short so beware bias

Cheers mate, I understand where your coming from, especially with the risk/reward aspect when waiting for a back test.

I have to admit I had to read the below paragraph more than once for it to sink in. I got there in the end though

Jackozy wrote:

and there was me still waiting for the gap from the 5th Dec.

PS From an EWT argument the most likely time to break through a horizontal support/resistance is on the 3rd attempt which is another reason why I don't think TSCO will go through this time. You never know for sure though so I'll be prepared either way.

No worries, Amo.

For me it depends on where the nearest other support is. By waiting for a backtest you're getting a lower entry (if going long) than by waiting for an entry after closing above the resistance but you risk it not backtesting at all.

If you just buy at where it opens after closing above the resistance then you'll be in negative territory if it does backtest and your loss will be greater if it turns out to be false so waiting for the backtest is better from a risk/reward POV - you just have to accept that it may not backtest and be prepared to walk away from the trade. On the other hand, if there's another good support just below the breakout level (like a gap) then you may feel that the risk/reward still works for you with a stop below the secondary support.

In TSCO's case, if 351p does prove to be resistance this time round then I'd look to close my short and go long at a strong support in which case I won't need to worry about it too much as I'll close the long at 350p and simply reopen it if it goes above knowing that I've got additional margin from previous profits....hopefully!

Cheers Jackozy, I'm just trying to understand the significance of backrests of support/resistance when taking positions.

Hi Amo,

That would be the ideal scenario but there's no guarantee that it will do that. 344p ought to be a minor support too so you could just go long with a stop below that perhaps. I'd be surprised if it went through this level this time round but I wouldn't mind a long from the uptrend support ready for the next attempt

Hi Jackozy,

If the price closed above 351p and one wished to go long. Do you think it would it be best to wait for a retest of 351 before doing so?

Thanks
Amo

As expected, TSCO is approaching the major resistance at 350/1p now. Here's the long term daily chart just to remind you where this resistance comes from:



dl.dropbox.com/u/20815047/TSCOdaily03_01_13.gif

We should be able to have a fairly tight stop of c. 5p on this as it's such a key level. If it closes above 351p then we could expect it to get to the gap at 385p which is close to the shorter term downtrend however there is that gap up from 326.65p to consider so I'll be taking the short from 350p.

dl.dropbox.com/u/20815047/TSCOdaily14_12_12.gif

Here's the gap on the above chart. IMHO it will get filled but maybe not before a test of the 351p recent high. My reasons for this are that the 2 types of gap which often get left are runaway gaps and breakaway gaps. In this case, while it has gapped up over a short term resistance, it's not a major one and it hasn't continued up in a fashion which supports the momentum required by either of these two gap types.

Two simple strategies for me here:

1) If it returns to the gap from here (before moving up) then I'd go long with a stop below the low at 320.2p (same candle the gap came from) and then close my long at 350p near the 351p resistance or;

2) If it continues up to test 351p then I'd short there and look to close and reverse to a long position from the gap using the stop detailed above in 1).

If I was to guess then I'd say that 2) was more likely to happen than 1), but then again, some people always favour The Third Way

Hi All

just wondered on peoples thoughts on the gap up on the 5th Dec and if it's likely to get filled.
i've been on investopedia and they say there are diferent types of gaps and that some don't get filled.

wondered what the CV crew thought ?