Transition to Stage 2 Breakout
Transition to Stage 2 Breakout.
Here is the hourly chart because the daily
incorrectly shows the bearish gap down. The
hourly chart, however, shows a Climactic Buy
Setup (CBS), followed by almost two days of
narrow range basing. This suggests that the
selling is exhausted. Previous day it made a new
low; however, there was no follow through to it,
and it closed with a Bottoming Tail (BT). The
next hour's candlestick was a bullish engulfing
bar on Increasing Volume (+Vol.), from which it
based into the close and made a higher low. You
can also see the very oversold condition and far
distance from its 200MA, suggesting a snap back.
Because the hourly sold off in a "clean V"
fashion, there is very little supply to halt the
advance if it breaks out, giving us a great
reward-risk trade. Although not shown, the daily
chart closed with a Bullish Changing of the
chart courtesy of
Tip: A breakout from a
base following a CBS acts as major support to
propel the retracement.
Buy over previous day's high, with a protective
stop under previous day low.
$1.00 to $1.75 move.
NWL stopped at $23.36 (prior
low after two full days of trading) for a $.09