I apply technical analysis to short-term trading. I am the author of the book "Trading The U.S. Markets - A Comprehensive Guide to US Markets for International Traders and Investors" published by Harriman House on 31 July 2008.
The aim of the pattern is to profit from false breakouts. When the trend is strong, the reversal will not be long. However, sometimes reversals can be quite profitable. It is a typical swing trading pattern, working well in volatile markets. The rules are:
- The previous 20-day low has to be at least three days earlier. The close for the day must be at or below the previous 20-day low.
- The entry buy-stop is placed the next day at the earlier 20-day low.
- The previous 20-day high has to be at least three days earlier. The close for the day must be at or above the previous 20-day high.
- The entry sell-stop is placed the next day at the earlier 20-day high.
As a part-time trader, in the evening you can plan trades for the next day and insert in the system entry stop orders and stop loss.
As an example, you can see in the figure a Turtle Soup Plus One Sell Setup on Costco Wholesale (COST).
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