PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Continued from Part 1
From before, I noticed that the daily and weekly trends for BBY seem to be conflicting. Since I am typically a short to mid-term trader, my attention to the longer weekly trend wasn’t an overwhelming factor for me…maybe it should have been. All that being said, I don’t care much for crying or whining over losing trades. The important thing, for me, is that I learn something from every trade that I make.
Notice from the next screen there where some other indicators that lead me down the path. First, the upper Volex was pierced. Second, the upper Bollinger band was also broken. These indicators by themselves are not persuasive, but reinforced my belief in a resistance in the price of the equity.
Looking at the 50 / 200 Simple moving average, there was a bearish crossover around 01-12-07. The 200 Simple moving average also seems to be hovering around the Elliott Wave 4 peak, and may provide further indication of resistance. The next step was to see if the trade fell into my risk/reward profile.
Applying Profitsouce’s risk to reward tool, the stop price was set at the Elliot Wave 4 peak of $51.80, the entry price was around $50.08, and the profit point was at $44.85. The timeframe for the trade was initially set at 30 days from entry. From the risk to reward tool, we can see that this is a 3.16 to 1 trade if we decided to short the stock. For stock trading this would already be a qualifier for me, but can I get a better risk to reward by trading the option on the stock?
We’ll have to see later,
Fibonacci
Continued in Part 3
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PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 2, Profitsource, Wave 4 Sell |
