Hey everyone! I'd like to point out a medium risk trade but one that could have a decent reward. This particular asset has been in a slow bleed after poor earnings back in the beginning of August but my indicator is suggesting that there's a decent probability that this is done selling off and could be setting up for a 17% run up to approximately $23.
Why $23 and not a gap fill? That's just not how I trade. I'm looking for mean reversion which could take us to the 100EMA (hourly) or possibly the 200EMA (hourly) over time. Higher timeframes (such as daily) could take us to the 21EMA or 55EMA as well and likely hit similar targets.
I'm looking at this with a reasonable stop loss. The P&L on the chart shows 3% stop loss. I'll be giving a 3% stop loss to give a little more wiggle room as stop hunts are common. That said, we're looking at a stop loss somewhere on the other side of $20.
From a waves indicator perspective (thats the indicator at the bottom of the chart), our red wave is indicating exhaustive selling which, again, indicates that we could be done selling off and we may be ready for a move to the upside.
Everything in trading is all about probabilities and not certainties. The probability is here with this setup. Because of that, I will be taking this trade. One of the lessons I teach is risk management. We have a stop loss for a reason, therefore if you take this trade, you must put the stop loss order in. If the trade starts moving in our favor, then you can move your stop loss as we go.
Cheers <3
-CE-
Why $23 and not a gap fill? That's just not how I trade. I'm looking for mean reversion which could take us to the 100EMA (hourly) or possibly the 200EMA (hourly) over time. Higher timeframes (such as daily) could take us to the 21EMA or 55EMA as well and likely hit similar targets.
I'm looking at this with a reasonable stop loss. The P&L on the chart shows 3% stop loss. I'll be giving a 3% stop loss to give a little more wiggle room as stop hunts are common. That said, we're looking at a stop loss somewhere on the other side of $20.
From a waves indicator perspective (thats the indicator at the bottom of the chart), our red wave is indicating exhaustive selling which, again, indicates that we could be done selling off and we may be ready for a move to the upside.
Everything in trading is all about probabilities and not certainties. The probability is here with this setup. Because of that, I will be taking this trade. One of the lessons I teach is risk management. We have a stop loss for a reason, therefore if you take this trade, you must put the stop loss order in. If the trade starts moving in our favor, then you can move your stop loss as we go.
Cheers <3
-CE-
Trade closed: target reached:
