Quote from AMT4SWA:
Yes....I wanted to make sure we were not going to blast right through that stop zone and take out what little divergence remained. I would have still wanted to sell the move, but if the divergence was taken out then I would have handled the trade set-up differently......I would have let the rally run a bit more before starting to take my shots. If the delta divergence would have been totally taken out I would have waited to see if maybe price could have traded to at least the 931/932 area....before looking for order flow transitions to sell the move (about 5 points beyond the previous 926.25 high).
Seeing order flow transitions finally forming as we traded 927's/928's gave me the green light to start taking shots. I had to watch the delta close on that one though as we only had that minimal divergence holding at the time.....the second small rotation that touched 928.25 in that "stops" zone I was ready to react if needed. The good thing was a second order flow bias shift from the sellers hit just after we had the 928.25 touch, so I was adding at that point. The trade looked better at that point and then sellers pulled us right down out of those upper pricing levels.....it was all good from that point on.
That's quite a dynamic picture you're looking at, between order flow bias and prevailing divergence at the retest price level. Assuming the divergence at 926 were to be taken out and you'd have let price go to 931 before taking a shot, would the divergence at 931 be a factor in the decision?
