Trade Recap FEYE

Good morning. I am here on a Saturday morning in Miami writing a trading recap, wow I must really love trading :) Today I am going to talk about a nice yet tricky stock I encountered yesterday. FEYE

FEYE---My idea for this one on the scan was for a push higher out of the gate. On the daily I really liked the consolidation pattern it was forming and I thought sooner or later it was going to make a nice move to the upside. Here is how the chart ended up yesterday. It pulled back at the end of the day, but we had a nice long trade early on.

Now as I like to do, let's zero in on the intraday action and take some notes. The stock opened with a slight gap up into resistance from the day before, gap ups can be tricky because with no news to send it you never know if it will fade off or keep on going. It then bounced a little off a nice area of support. The reason I would not have bought here is because personally i like to wait for a higher low or at least a double bottom before taking the risk to enter. Just a higher prob set up in my opinion.

Next it began to move back down again but these candles started to look weaker. In my opinion it is also very important to look at the strength of the candles into a move or pullback. This can tell you loads of information. I dont mean simply candlestick patterns but more importantly the size, overlap and wicks of a candle. Here was the tricky part which tends to happen a lot before nice moves. The last candle below the reversal was actually a lower low but if you look at it , it barely pierced the previous low, so this was a classic fakeout move to get people out. Remember the plan for this one was a long NOT a short, so even if it looks as thought it is going to go short you dont touch it unless you have confirmation. Follow your rules. Next it reversed and once it broke the trendline that was forming it was a confirmed long. Here is a look at it with the trend line drawn.

So in summary you have to be ready to encounter these types of moves. Sometimes trick moves will happen to shake you out of the trade or to prevent you from getting in. But if you have your bias set and see a fake out like so followed by a break of a trend line to the upside you know its time for a nice move in that direction. So as always remember to stick to your plan and wait for the trade you were looking for UNLESS you have a plan in the opposite direction.