Second Trade of this year. Bought xom @ 59.43 and sold @ 60.43. Reason for exit: The rally was not a real breakout. It fizzled out after first week of trading in the new year. The market seems to be booking profits. Reason for entry: MACD histogram was rising breaking the back of the bears, EMA was rising. It looked bullish and set for a strong upward movement. Short term profit taking has made the bulls weak. The fast oscillator was not at a highly bought level. It was close to approx 75%. Stop loss was set very tight (only 50 cents) because of the signals from the chart.

Feelings: The swings tested my patience. I had to re-evaluate my original analysis of the stock due to the market conditions. Happy because I quickly moved the stop loss to breakeven. I did not want to turn the winning trade into a losing one. Another reason for the sell is to allow me to step back and analyze or let some clarity emerge from the charts.

Another reason for taking the exit early is to put on more trades and learn. At the end of the market, the chart shows a pennant (width of the high and low is getting bigger, 1,2,3,4 etc). I think a breakout will occur at the end of this chart pattern.

So the question is how to recognize the end of the pennant?