On May 13, 2015, we received an Ichimoku 4 multiple time frame buy email alert on PGH-ASX, PACT GROUP FPO for the Australian stock market. The email is shown below:]
For the trade of the week, we choose an “ugly” consolidation pattern. A lot of stocks in the Australian stock market are consolidating. Since we are dealing with a consolidation pattern, we are going to use a pull back strategy to keep our risk low.
We are going to use the 240m time frame to setup the pull back trade. The entry will 4.14, initial stop of 4.10, preserve mode of 4.25, and a target of 4.28. The target is the top of the consolidation pattern. The risk is 0.04 and the min. reward is 0.11 to preserve mode. To preserve mode, it is close to 3:1 reward/risk ratio. To the target, it will be over 3:1. Here is the chart:
The trade was entered and preserve mode has been reached. The current stop is 4.17. Since our entry was 4.14, it is a “free trade” i.e. stop is above our entry.
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