Browsing “Trade Set-Ups”

SnapChat SNAP Surges to Falling Target on Bullish Engulfing Play

Aug 23, 2017: 1:24 PM CST

The last time I posted on SnapChat (SNAP) I clearly highlighted the “Aggressive Bottom Fishing” taking place.

Here’s the successful outcome of that bullish “fade/reversal” play as price crept strongly higher toward our falling EMA target.

Let’s take a look and see what the plan is from here:

SnapChat SNAP Daily Downtrend

Again, take a look at my August 16th “Aggressive Bottom Fishing” post for some perspective.

While a downtrend is clearly in motion, price does tend to “swing” higher and lower in a progression of lower lows and lower highs.

We use the Moving Averages to guide our decisions with structure and possible trade entries (and targets).

In fact, let’s zoom in even closer to see the most recent action with the big positive divergence and even bigger Bullish Engulfing Candle which set the stage for a successful – aggressive – “fade” trade that hit its target today:

SnapChat SNAP Daily Downtrend

Shares traded higher in a “counter-trend retracement” toward both the falling 20 day (green) and now 50 day (blue) Exponential Moving Averages.

We use these as targets as you can see in the yellow highlights in the broader downtrend in the first chart.

At the moment, shares are stalling at the falling 50 day EMA target, granting aggressive traders a chance to exit with a $2.00 or more successful swing trading profit.

The NEXT trade will be the DEPARTURE from the $15.00 per share target. Continue Reading…

Comments Off on SnapChat SNAP Surges to Falling Target on Bullish Engulfing Play

Studying the Rounded Reversal Breakdown Setup in Ford

Jul 26, 2017: 9:42 AM CST

Ford (F) gives us plenty of educational examples of how a market sets up a trend reversal and the stages price goes through ahead of these excellent opportunities, especially for swing and even intraday traders.

Let’s take a moment to study this perfect progression for our educational resources:

Ford F Intraday Reversal Stages

Before we step inside this chart, take a look at this morning’s post on Ford’s Bear Flag.

Pay close attention to the rally UP into the falling 200 day SMA which was near the $11.85 level.

Here’s the main point – price (in a downtrend) rallies UP toward a critical resistance target on a HIGHER timeframe.

That’s sufficient for a short-sale set-up and trade – nothing else needs mentioning.

However, if you want extra confirmation or are nervous about taking a trade, you can always step into a LOWER time frame to see what’s happening there.

As it turns out, Ford was forming a perfect reversal set-up on the lower frame – seen here in the 30-min chart – at the same time it triggered a bearish short-sale into resistance trade on the Daily (higher) frame.

Here’s the progression as exemplified by Ford on the lower frame: Continue Reading…

Comments Off on Studying the Rounded Reversal Breakdown Setup in Ford

AAOI Surging to Sixty with Two Bull Flags

Mar 27, 2017: 11:37 AM CST

We like to buy pullbacks in strong trends with rising volume and momentum.

A stock you’ve probably not heard of – Applied Optoelectronics (AAOI) – serves as the most recent example of this core trading concept.

Here’s the uptrend, flags, and outcome so far as another “strong stock keeps getting stronger:”

As explained in far more detail in our “Perfect Pullback” Strategy series, we want to focus our attention on trading IN the direction of a prevailing trend.

Generally, we want to buy shares on a pullback to a rising moving average or trendline as the trend progresses.

Buying pullbacks gives us objective (not guessing) entry prices as well as prices to locate initial stop-losses.

After stagnating around the $20 to $25 per share area, buyers aggressively accumulated shares during the January breakout, beginning a new uptrend phase in this lesser-known stock.

A pullback to the rising 20 EMA set the stage for a successful bullish trade in February.

Shares continued to surge as another breakout (gap) was confirmed with new highs in volume and momentum.

We would wait for a pullback to enter such a strong stock and that pullback developed earlier in March.

After a pullback to the rising 20 EMA (on declining bearish volume), share prices surged once again as would be expected, moving “up away from” the rising 20 EMA toward the current round number price point of $60.00 per share.

Continue studying this example and find similar patterns as you build your confidence to execute this simple strategy. Continue Reading…

Comments Off on AAOI Surging to Sixty with Two Bull Flags

A Second Divergent Drop for Google GOOGL

Mar 22, 2017: 2:33 PM CST

Google (GOOGL) rallied a second time into a key reversal or “fade” set-up and delivered the goods.

Let’s take a look at this “Divergence plus Upper Bollinger” pattern and learn what we can from this example.

Most trades are either taken in the direction of a prevailing trend or against it.

While I prefer pro-trend strategies like retracements or breakouts, aggressive “fade” or even reversal strategies have their place in a developing trader’s toolbox.

The “Divergence Plus Bollinger” fade set-up occurs in a mature uptrend when price rallies up into – or preferably peaks just above – the upper Daily Bollinger Band.

We can look beneath price at volume or momentum – often seen best on intraday charts – for any sign of negative divergence as price scrapes against the upper Bollinger Band.

This set-up is enhanced – with higher probability of success – when reversal candles like dojis or shooting stars (or even spinning tops) appear at the upper Bollinger Band.

VERY aggressive traders can short-sell a break of a rising trendline on a lower timeframe as we see here: Continue Reading…

Comments Off on A Second Divergent Drop for Google GOOGL

Big Downside Surprise for Finisar FNSR on Three Push Reversal Pattern

Mar 10, 2017: 1:16 PM CST

The “Three Push” Reversal pattern is one of my favorite chart patterns and set-ups to trade.

When it works, it can produce explosive gains quickly – often overnight.

Finisar (FNSR) gives us the most recent example of the Three Push Pattern on Negative Divergences via today’s collapse from the high instantly to a new chart low.

Let’s see what happened and what we can learn:

First, take a moment to review the “Three Push” pattern at our Education Section of Afraid to Trade.

Next, compare the textbook lesson with the pattern above in Finisar.

We have three almost identical (symmetrical) swings (or drives) to three new highs in the uptrend.

We’ll see inĀ  moment that momentum and volume were also negatively diverging with these highs.

When you’re trading bullishly with a trend, always be on guard for exhaustion or divergence patterns.

Today’s gap-down sends shares tumbling to where the pattern started which overlaps the September gap-up level and the rising 200 day SMA at the $26.50 per share level.

The downside target objective is often the origin of the pattern and/or a prior support level like this.

Here’s the broader picture development with divergences on the Weekly Chart: Continue Reading…

Comments Off on Big Downside Surprise for Finisar FNSR on Three Push Reversal Pattern