Step 1 – Look for a LONG RED CANDLESTICK resting on MINOR PRICE SUPPORT and also a rising MAJOR MOVING AVERAGE (10 MA, 20 MA or 50 MA).
Step 2 – Pull up a 5 minute chart of the stock.
Step 3 – Note the opening price of the stock. If the stock gaps up or down more than 5/8th, DO NOT enter the trade. If the stock opens within 5/8th of the previous day’s close, proceed to Step 4.
Step 4 – Wait for the stock to trade for 5 minutes. After 5 minutes, note the high of the first 5 minute candlestick.
Step 5 – Enter the stock if it trades 1/8th above the high of the first 5 minute candlestick. If the stock does not trade 1/8th higher than the high of the first 5 minute candlestick, DO NOT enter the trade.
Step 6 – Pull up a 15 minute chart of the stock.
Step 7 – After entering the stock, place an initial protective stop 1/8th below the low price of the day.
Step 8 – Monitor the stock during the next 15 min. candlestick.
Step 9 – Adjust the protective stop to 1/8th below the low price of the previous 15 min. candlestick. Stay in the trade as long as the stock trades above this price.
Step 10 – Monitor the stock during the next 15 min. candlestick.
Step 11 – Adjust the protective stop to 1/8th below the low price of the previous 15 min candlestick. Stay in the trade as long as the stock trades above this price.
Step 12 – Continue to monitor the stock during each new 15 min. candlestick, and adjust your protective stop to 1/8th below each previous 15 min. candlestick’s low.
Step 13 – Exit the stock for profit when it finally trades 1/8th below the low price of a previous 15 min. candlestick.
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