Long trade, basically the classic buy at $13.60
Bought today at $13.60
The red dashed lines intersect at my purchase price, the pink dashed line is my stop setting
The Buy In and the Stop:
I basically followed the plan from my last post on this. I bought in higher than I might have due to me farting around with the order in the morning. I could have got it for $13.50 but ended up at $13.60. My ultimate setup is to buy the stock at the open at whatever price it is going for. That saves a lot of time and hassle as I can spend time chasing the price trying to squeeze every penny out of the trade when, in the long run, pennies here or there don't make that big of a difference.
I set the stop right under the dashed red TWT line, $13.00
The price may pullback 1/3 of the jump:
" I fully expect that the price may pullback 1/3 of the jump from today anyway...this kind of a momentum price action quite often does that. "
Well, it didn't do that this time, it's certainly not a sure thing. I opened at the close from last week and never really went below that price.
The Targets:
A possible $1-$2 or so total target. Profit vs risk ratio = 1.7:1 to 3.3:1.
The target is smaller due to my $0.20 higher price getting in and the P/R ratio is smaller also as a result. The stop setting is also now $0.10 farther from my price. I usually go for higher P/R but this is the counter trend move and, while the P/R will always be lower the ultimate potential is that the price breaks the upper trend line boundary and continues upward in a new trend...should that happen the lessened profit and increased risk will be well worth it. Besides, I have some realized gains from the previous two trades from this stock should I need a bit of a buffer...not that I want to squander them on a poor trade, they are just a consideration.
The Goal:
The primary goal due to the small target and the trend is to have a position when the price hits...and possibly breaks, the upper trend line(s). If it doesn't I get a target profit. If it does I may be able to ride the new uptrend for higher profits or for a long term holding that I can keep buying into as the price continues to follow the uptrend.
I don't think the price will break the upper trend boundary line. I'm not 100% sure which line will serve as resistance but I am confident that the price will continue down after that point allowing for another target for a short sell trade. Perhaps this will be the start of a very wide triangle consolidation pattern with a trend down between the lower trend line on the chart and the lower of the two upper trend line boundaries.
JD.
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