From April 29:
"Yesterday's morning rally was very nice, but given the point deductions in the scores for Technical Merit and the fact that GG got to 75-80% of the target so quickly, I sold at the 75% marker.
75% of the 1.25 points that were IN PLAY is 0.9375 points, added to the breakout above 55.00 = 55.9375."
Selling at 55.94 (see real-time execution in the last GG post) into that rally to the 56.25 target that was IN PLAY, worked out very well. GG got to 56.20, which as I said, certainly is close enough, especially given the point deductions for technical merit. This ain't rocket science and, again, targets only are "what we're aiming for."
When a Right Shoulder of a H&S pattern (top or bottom) gets taken down after a breakout, that's a warning. When the low (or high) of the Head gets taken down (in this case it was the low of the Head), that's a BIG warning. The points that were IN PLAY on the upside now are deducted from the low of the Head and they are IN PLAY on the downside, as long as the stock trades below the low of the Head.
GG did a lot more than that on the downside yesterday. It also took out horizontal support (the yellow line) at 53.66, and continued down so it gets additional point deductions from its scores for Technical Merit. We can guess what Judge #7 would say about that ;)
From yesterday morning:
"Since the Double Top had a "3-day Knuckle-Biter" for The Bears after the technical breakdown, that's something to watch for in the intraday charts of NVDA, to see if the fractal behavior is going to continue, especially since the 34/55RSIs currently are at Bearish Synchronicity, which represents possible resistance here.
The Double Bottom breakout is against the dominate trend since The Bears control the Kumo (Cloud), so we need to be mindful of that."
Interesting. NVDA Double-Topped in the early going, with highs of 20.44 and 20.43. Double Tops also are known as "M"-Tops because the intervening pivot between the two upper corners of the "M" is the key to the pattern (it's the 22.37 low in the daily chart, below).
A break of the "pivot," in this case the 20.01 low, is the key to the Double Top. Once that was broken, a downside target of 19.59 went IN PLAY and remained so for as long as NVDA traded below the 20.01 pivot. When NVDA went back above 20.01, the target was ON HOLD unless/until it went back below 20.01. That's a "knuckle-biter" for the shorts when that happens. Anyone who shorted the breakdown below 20.01 had to decide how well they liked their trade at that point because the downside target was ON HOLD. That decision, of course, was up to the individual trader, if anyone shorted the Double Top breakdown.
Math for the Double Top:
20.43 - High (The more conservative of the 20.44 and 20.43 choices)
20.01 - Low of the pattern
20.43 - 20.01 = 0.42 points of downside on a break of the 20.01 low (pivot)
20.01 - 0.42 = Target: 19.59 IN PLAY
NVDA broke back below the 20.01 pivot and put in a low at 19.63, within four cents of the 19.59 target. That low was within a penny of the Double Bottom breakout pivot of 19.64 in the daily chart, and also was within two pennies of the 19.61 gap, seen in the next chart (the horizontal red line)
Since we had the confluence of the 19.59 Double Top target (intraday chart), the 19.61 gap (intraday chart), and the 19.64 Double Bottom pivot (daily chart), The Bulls did their job and stepped in AT SUPPORT, thus the 19.63 low.
That sets The Bulls up for a chance at breaking out of the Falling Wedge (the pattern in white) in this chart if they can "bring it" into today's session.
Anything below the 19.64 Double Bottom pivot is Ye Ol' Knuckle-Biter for The Bulls.
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