Messed up, need help with understanding this; Bullflag and 50 crossing the 9/20

[CliffG 31]

I would definitely still consider myself to be a novice, so I'm looking for some help in understanding something.

I took a trade on $TWTR earlier, but I got stopped with a 1R loss. Trying to understand where I went wrong!

It's been going up most the day, looking for a potential reversal. it was consolidating with the 50SMA incoming. I noticed the volume on the down candles was larger than the up candles. When the 50 hit the price action, I took it short with a SL being the high of day.

I felt the volume supported my decision, but it was taking too long. At that point I asked in the chat if someone can take a look. Chris mentioned he sees potential bull flag, and at that exact moment, the stock popped and I got stopped out 1R loss.

 

So, obviously I have some questions. I've heard of Bull Flag, but never really understood the pattern. I looked it up afterwards, and all I saw was ABCD pattern - is it the same thing??

I've seen so many times in the past where the 50 crosses the 9/20, the price would come down. I take it that's not a given, so really not sure anymore, and I'm a little confused. Hoping someone can elaborate on what they see here, perhaps factoring in Volume and the 50 crossing the 9 & 20. 

Thanks in advance.

[CliffG 31]

5 minutes ago, peterB said:

yes ABCD is a bull flag basically. it goes up as a rod then waves sideways as a flag untill it comes to a point then shoots up another leg

if the pattern you traded works for you most of the time and this time id did not work, just dont worry. the market is kinda random beast. but maybe this time you proved that going against a bull flag pattern with your setup is perhaps too risky so next time you do better consider it.

anyway your short was against the level it bounced off 2 times before and 2 times after your entry so it was a strong support level. maybe more obvious on higher timeframe charts but it looks like it was going sideways on 5 or 15 min chart then touching an EMA on one of those and continued up as ABCD. that is perhaps what other people in the chatroom saw - the ABCD or the Bullflag pattern. Also the stop loss you had could have been closer at the 43.24 level but that is only my opinion

Thanks Peter. This is my first time trading this setup, but you make some very valid points - and I need to consider those.. In hindsight, that support level should have been my confirmation - if I get a 1 min candle below it, it may have been more appealing. Thank you for the feedback Peter.

[Ashley Hitchen 0]

As Peter said, if it is just one unsuccessful compared to numerous successful trades, then that is just part of the game unfortunately.

I think you have to look at it over multiple time frames to get a better picture, especially during middle of the day.

The volume at 12:40 was the highest for that "resting period", yet it didn't flush and formed a Doji. On the 5-min chart you have a hammer at 12:40 and some signs of support at $43.12 which is confirmed on the 1-min chart as never goes below again. Then finally, on the 15-min chart is where you see the bull flag which is formed on high volume burst followed by low volume consolidation before the next leg up. Everyone is different but I would have wanted to see it go back towards $43.30 and fail to break higher before going short or to close below $43.12 again and show signs on weakness.

Keep at it. Can't win them all and you had a set stop which is good 🙂