For those looking for the discussion of the original setup, you will find it in this post:

For awhile, it looked as if price would barrel through the resistance zone with barely a pause. However, that trade trigger came this morning.

July 16th 2018 FKLI Hourly

There were a total of three bearish indications before the trade triggered to the short side. The first was a bearish engulfing candlestick, which looked promising but provided no confirmation. Price did not trade below the low of that formation, which would have been the required trigger.

The second setup was the bearish harami. This was not the strongest indication, but if price had traded immediately short below the low of the black harami candlestick, it would have been a legitimate trade.

However, price gapped up today and created a pin bar that looked dubious. If traders had chosen to trade the break of the low of this bar short, they would have been rapidly rewarded. Unfortunately, we didn’t, as our proprietary entry rules did not permit this particular trade. It would have been beautiful.

Instead, we were stuck with the trigger on the break of the bearish harami, which has recently occurred. This entails a larger stop loss, above the recent swing high. We do not know how this trade will work out, but it seemed appropriate to post a discussion of the entry conditions.

Happy trading!

Kaye Lee
Head Trader Consultant