Topping Tails and Price Voids TWM 050708

A few days ago, I showed how the Nasdsaq was hanging out at the top of it’s channel, and needed a pullback. Yesterday morning I thought we were going to get that breather the market needed. I was wrong. Prices moved higher most of the day yesterday. When they failed to head over that topping tail shown in the IWM 60 minute chart below, the only direction was down, until it found support to the left.

I tried trading the ultrashort TWM yesterday, using the buy signal on the 60 minute chart. You can see that the first buy signal ended up getting stopped out. The next buy signal was the winner. Now, I don’t really know how to avoid this , except by moving to a smaller time frame when managing the trade. I do know that you must take that 2nd buy signal though. Easier said than done when the painful memory of getting stopped on the last one is fresh in the mind. You have to look at the price void above, combined with the bottoming tail on the TWM chart, and ask yourself… Is there any reason to not take the trade?

Now if you do miss that 2nd buy signal, ratchet down to a smaller time frame of 15 or 5 minutes for a possible entry.