Anatomy of the ideal pullback

I

italian_trader

It would probably be very intersting to know how people is watching pullbacks from different perspective.
Please rank all the things you routinely watch in a pullback and discuss why you feel some factors are more worth watching than others.
For instance:
1)inclination and duration (compared to the trend to be retraced)
2)shape (it should look as linear as possible)
3)percentage of retracement
4)average bar volume (compared to the trend average bar volume)
 
I use a 5min chart on the ES and the Russell (TF).
If it looks like a pullback, it usually is.
More than about 4 bars, and I suspect it, unless, like this afternoon, the ES pulled back to yesterdays close, AND the 20EMA.
No brainer.
(Just found out I get Bloomberg TV in my cable pkg..just moved to the SF Bay Area...YAY!)

I try to keep my charts, and my trades, as simple as possible.
I use a 15 min for immediate trend (ok...everythings relative), a 20 EMA, and I draw a red line at Yesterdays close.
Thats it.

The inclination/duration/shape of the pullback should be a thing of beauty, simple yet powerful.
 
all pulbback here talked about are supposed in an uoptrend

they are drops. the same as you see in a down trend.

to confirm a pullback, you need see a bottom. if the bottom is higher than former top (the top before the most recent top), it is a pullback. occasionally it cut through toward former support.

if not, it is a reversal.

buy pullback is very tricky. that is why i do not buy pullback, I just buy new high, safer or odd is higher.

most people like to buy low, so they buy pullback. the problems are they try to buy lower, it seems it is better bargin, but they are buying a perfect reversal point.

the shallower the pullback the better or the odd is higher.

of course volume is another important thing to consider. in a normal pullback, volume is reduced or dry up.
 
Quote from trader198:

all pulbback here talked about are supposed in an uoptrend

they are drops. the same as you see in a down trend.

to confirm a pullback, you need see a bottom. if the bottom is higher than former top (the top before the most recent top), it is a pullback. occasionally it cut through toward former support.

if not, it is a reversal.

buy pullback is very tricky. that is why i do not buy pullback, I just buy new high, safer or odd is higher.

most people like to buy low, so they buy pullback. the problems are they try to buy lower, it seems it is better bargin, but they are buying a perfect reversal point.

the shallower the pullback the better or the odd is higher.

of course volume is another important thing to consider. in a normal pullback, volume is reduced or dry up.
More...
On what time frame?
 
Quote from FreakofNature:

Was gonna ask the same thing
More...
Oddly enough, I've seen really nice LOW risk pullbacks on a 15 Min chart.
Longer time frame, stronger signal.
Just not used to seeing everything on a 15Min chart, yet.
 
There is no such as an ideal pullback -- or any ideal pattern, for that matter. There are, however, some contextual cues to look for.

1. A trend is necessary (duh)

2. A point where buyers/sellers are likely to sell/buy has been hit (call it S/R if you want)

3. There is a sell-off/bear rally

4. You notice buyers/sellers are holding up/pushing down price (higher low/lower high)

5. Find a good location for entry. The better your skill, the lower the risk

6. Ride for fun and profit!

Anything else such as specific time frame and using indicators or whatever is mere flavour or preference.
 
Quote from italian_trader:


Please rank all the things you routinely watch in a pullback and discuss why you feel some factors are more worth watching than others.
More...


Assuming that one is trading stocks:

1. What happened with the stock yesterday?
2. What happened at today's open? (Think about why that might be important. If traders sold off a stock at the open, do you really want to play for an intraday low expecting a rally?)
3. What is happening right now compared to yesterday?
4. Are you seeing a spike in volume right now indicating sellers bailing? (Not a necessary component, but often helpful.)
5. Adjust #3 based on daily VIX. VIX plays a big role in defining a good level to enter a pullback.
6. Is there any news? What is it? If it is fundamentally damaging to the company (which will often be reflected in the opening price), stand aside. If not, go for it.
7. Stops are tough. Understand that by its nature, a pullback is going to often be volatile and require some room to run. If you set a tight stop upon entry, don't be in too much of a hurry to raise it or you'll get taken out.
 
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