Tuesday, August 23, 2011
Two legged pullbacks vs A2 vs G2
There are two legged pullbacks and there are A2s. The difference is that an A2 is around the ema, including just slightly above to overlapped. A shallow 2 legged pullback such as b13 or b36 is not an A2. An A2 is preferably deep and gives an entry near the low of the pullback. This is preferable since even a test of the high would mean a bigger payoff.
Shallow pullbacks such as b13 may be traded, but they should only be scalps. There is a very good chance that a shallow pullback entry's breakeven stop will be taken out except of course for soft and hard trends.
On the other hand, a G2 has relevance only in a very strong trend. An attempted sell-off gives a cheap entry for everyone who missed prior entries and they will rush to buy. If the trend is not strong, G2 cannot be taken on its own.