NMX - Nymex Holdings Inc NR7

One hot stock I’ve kept on my radar since it’s fantastic IPO is NMX - Nymex Holdings Inc. The trading range on it’s opening day was a whopping 32 points! On that day, I illustrated a trade in NMX which used the 5-minute opening high. Today’s trade is a breakout of a base intraday using the daily chart as a guide.

The daily chart of NMX Holdings shows a steady pullback. It’s also formed a NR7 - Narrow Range 7 setup. The 7th trading day has the narrowest range. I’ll add this trade to the Trading Patterns examples category. This technical pattern works like a coiled spring. The tighter the range gets, the bigger the fight becomes between bulls and bears. One side finally wins. The move is fast and furious as the other side throws in the towel. In the case of NMX, the supply of sellers finally dried up, and buyers took control.

Depending on your risk tolerance, you could buy this over the higher high on the daily chart, or intraday. On the 5-minute chart, an opportunity presents itself over the base I’ve shown, or over the opening 30-minute high. Incorporating the NR7 trading pattern with extended pullbacks is a great way to play stock reversals.