New Pattern: Dead cat bounce(DCB)

1-GAP

2-MEASURE GAP DISTANCE WITH FIBO 0 TO 100

3-IF RETRACEMENT TO 50%/61.8% AREA

4-A-IN CASE OF DOWN GAP(UPRETRACEMENT)..SELL BELOW OPREVIOUS BAR LOW..once price is in the retracement area

4-B-IN CASE OF UP GAP(DOWN RETRACEMENT)...BUY ABOVE PREVIOUS BAR HIGH...once price is in the retracement area

5-STOPS:FOR SHORTS:ABOVE TOP OF GAP..FOR LONGS:BELOW BOTTOM OF GAP

6-TARGET:LENGTH OF GAP from point of entry.

My Comments:1-Officially the DCB requires a gap move of about 15% of price,this for some stocks is ok,not so for Forex.

2-Stops:Many gaps close, the top or bottom of gap are touched,THEN price continue in the original gap direction,so,I prefer to use stops at bar close above previous high or below previous low.

3-Targets:there could be alternative targets that are valid too, like nearby support or resistance areas.

NEW ENTRY:Short EURGBP @ 0.7996...DCB on m30...STOP:M30 CLOSE above 0.8040...TARGET:0.7875/0.7905 area

Please see attached chart.

Regards
Simba

Attached Images

deadcatbounceeurgbpm30.gif (61.7 KB, 305 views)

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