Trading losses are your best friends. If you are astute, what they take from you in capital, they can give you many times over in knowledge. That is if you welcome them and study them carefully. You gain money from profitable trades but wisdom from your losses.
Take a look at this chart from yesterday:
ENER spiked up in the morning with a wide range bar. That was a significant advance since it cleared it of short term resistance in the $33.50 range. The second candlestick was an inverted hammer but prices held at the top of the opening range. The third candle again took pice up to above the opening range. Things looked good. You even had the 5 minute moving average (blue line) acting as support.
But if you took the trade as price broke above this little flag that had formed, you would have lost money. Price soon weakened and headed down for pretty much the rest of the day.
So what happened? why did it fail?
UPDATE: The charts that I had for ENER where a little off. To be more specific, the second and third candles where not accurate. They were corrected. As you can see, there are two back to back dojis right at the top of the opening range.
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