Today I did myself a favor and stayed away from high beta high spread stocks like GOOG and AAPL.
Drawing parallel trend lines has proven to work wonderfully as shown in dotted line above.
The chart also shows the dilemma of multiple pivot points interfering against the optimal trade. The short position taken at 11:00 on trend line break was exited at the dark blue intraday pivot (also the previous local low at 10:30). The mistake here was that I was too timid and too penny-pinching in protecting my profit. I should have let the chart reverse and thus confirm the pivot point/support. The chart showed no bounce whatsoever there!
The next short position at 11:20 on pivot break was stopped out shortly. Again, due to extreme low confidence in my trading right now, I took it out the moment it went red. Contrary to my trade, it actually tested the blue pivot line as resistance and proceed to go all the way to the lower channel of the parallel trend line and the previous day low.
Now the long entered at 11:45 was again exited prematurely because of low confidence and the fact that the STO was overbought and the 20 SMA dash line could be a resistance. Look at the lost opportunity!! If the right entry cannot be harvested, I don’t know how I could get ahead of the market.
SPY went on and broke the previous trend line resistance. A new intraday trend line is drawn in magenta. A speculative short position was entered shortly before it was tested at 13:40. By luck, it tested successfully, but I then took the protective profits right away at the trend line support. Again, I should have give it some room, risking a portion of the profit. Look at another big move I missed.
Granted, I’m really timid with the market right now as my portfolio value is nearing the low range (< $138K), but to succeed, I will need to take losses dilengently the same way I took out profits today; on the other hand, I need to be more patient in order to capture a bigger move when I’m on the right side of trade. There were times when I wished I had taken the protective profit, but that should be the exception rather than the rule.
Another observation is that a chart can stay overbought/oversold for a long time, so while they cannot be ignored, they should be down-played the time when a trend is forming.