Follow-up on the CDWC trade

As mentioned in my yesterday's post on (CDWC), I was looking for someone to confirm/comment on my observation, and my decision on how I handled (CDWC). Later that evening, I came across this post made by Jamie at Wall St. Warrior. Apparently, someone posted a similar question to Jamie on (CDWC) as well.

Here is Jamie's view on (CDWC).

20070410 - INCY - 15mins - Reviewed by Wall St. Warrior

Another post-match review, this time by Jamie from Wall St. Warrior. Please note that the chart above is a 5-minute chart. Jamie brought up a point that the 5-minute chart was 'choppy', and therefore I want to include the chart in this post for review. Jamie also mentioned about the "Long upper shadow on the 3rd bar", which should have served as a caution. Here is his review:

I see a few red flags on INCY:

Long upper shadow on 3rd bar.
Choppy trading especially when I drill down to the 5 minute timeframe.
Resistance dating back to early February at $7.70.

Usually when resistance is just overhead, I wait until resistance is taken out and then try to get in on the retest (ie. resistance becomes support). You entered as price broke resistance on the 10th bar. When it pulled back in and did not hold $7.70 as support, it resulted in a failed breakout and a signal to exit the position.

And since both ADD Traders and Jamie mentioned early February high, I am also attaching the daily chart below, to point out what they are referring to.

Once again, I want to express my million thanks to these 2 individuals, who are willing to take time to respond to my inquiry. Thanks!

20070410 - INCY - 15mins - Reviewed by ADD

As mentioned, I was going to post a question to the Pro, to find out why they think the setup on INCY failed today. This comment was left by ADD Trader, in response to the question that I posted on Trader-X's site.

Hi Closet,

For what it is worth.....

The high of 9th bar did close strong above the OR high, but below the high of the day and you had a big tail on the 3rd bar to be wary of. Maybe of more importance though is that the high of the 9th bar was the exact high (7.70) that INCY made on a daily chart on 2/2/07. I know X doesn't look at larger time frames, but they can come into play, ESPECIALLY on large gaps right up to resistance.

Also, sometimes a good set up just doesn't work out. That pullback on the 10th bar (leaving a long upper shadow) should have been a sign to possibly close the position. And if not, then definitely on the pullback from the 13th bar high. Three failed attempts to break out tell you (in my opinion) that the chances of it happening are slim.

Not to say I would have sold....just look at my short in STX...I had three chances to cover and didn't. Doh......!

ADD

A million thanks to ADD Trader for spending the time to provide his input. After digesting his suggestions, I made some notes on the chart, to highlight what ADD Trader commented. He pointed out quite a few things (yup, a few! Scary!) that I missed when I was in action. It is definitely something that I need to learn.