Stock Pattern Trading in TEVA

I’m done trading for the morning, and thought I’d show how I used multiple time frames to trade one stock in the early session. This securitiy came off of the morning gap list. TEVA, Teva Pharmaceutical Industries Ltd. gapped down .46 from yesterday’s close.

Notice how the stock gapped below the 50 day moving average, after a long period from August to September of going nowhere. There’s going to be some bulls who want out. Another aspect that I liked was the wide, open area below. I noticed TEVA about 20 minutes after the open, and sold short into the fifth bar down. This was a late entry, so I decided to scalp by setting a trailing stop using the previous bar’s high.

A target of 2R was set for 1/2 the shares. I chickened out though on the 6th bar covering early for a .5 R gain. More scanning was done, but I kept my eye on TEVA for another stock pattern to set up. Within a half hour, a BS2 formed on the smallest candlestick you see at the 7:30 hour (West Coast) by a penny. I didn’t pounce on it, because the stock had already fallen hard. This set up a nice FBS2. R = .10. I was filled on about 75% of my shares as the stock popped a little, and I was using a limit order. The first 1/2 had a target of 1.5 R, and the rest would be sold at 3R. The first target hit, but the 2nd half of the shares were sold as indicated on the chart. I used the trailing previous bar low as a stop when the stock was up 5 bars straight. When you can find opportunities where R is small in terms of point value risked, you can make some nice profits. This trade was against the trend, and I pushed it as it was. Here’s something interesting though. Look at the 15-minute time frame of Teva Pharmaceutical.

There is a very fluid BS2 stock pattern playing out. The 20-day and 50-day moving averages have an even space between them and are falling. I was focusing on shorter time frames this morning. If I chose to open the picture a little wider, the 15 minute chart could have been used. I chose to scalp, as the market has been very whippy and I’ve not tightened stops soon enough lately.

It really is an advantage using more than a few time periods to evaluate each stock trading pattern. We’ll see if the afternoon brings any juicy chart patterns my way.