Study Guide for Come Into My Trading Room - Forex Factory

ANSWERS 191
IBM rises into area E but fails to reach its upper channel line, a sign
of lessening bullish power. If you miss this signal to sell, IBM rings a
loud bell a few days later in area F. Another rally fails to reach the upper
channel line, signifying weakness. At the same time, Force Index traces
a bearish divergence E-F, calling for more weakness ahead. This is the
type of strong sell signal that professionals await before banging out of
their entire positions.
IBM offers yet another opportunity to get long, in area G, near the
EMA, but it is very questionable whether we should take that signal.
The trend is still rising, but going long so soon after a bearish divergence
is seldom a good idea because more weakness can be expected. From
that point onward, IBM goes flat, tying up a trader’s capital and, more
perniciously, his attention, which could be more profitably invested in
other stocks.
DAILY CHART A-7C
Exit Ratings
Sell longs in area A: 3 points
Add to longs in area B: 3 points
Sell longs in area C: 3 points
Add to longs in area D: 3 points
Sell longs in area E: 3 points
Sell longs in area F: 5 points
Add to longs in area G: 1 point
PASS POINT 11