In the past, we’ve talked a lot about the sweet spot trade setup for swing trading. Timing entries for weekly sweet spot gives us a number of benefits:
- Very constrained risk
- Big potential rewards
- Trades can start off in the right direction as a function of ‘noise’
- Chances to take profit off the table early
- Make it or break it – straight forward outcomes
We now have the opportunity to review an example, as it developed week to week using live observations from the weekly Q&A call. WYNN recently traded as low as $86.34, beginning the trade setup, and has since gone up as high as $104.91.
That’s up over 16% & have yet to see if prices can break out the weekly highs. If prices continue up this week, that could extend the profitability of the trade, but a winning outcome is already secured through 5 stages:
1. We first saw WYNN show up on my screener list at the end of June, when equities broke on Brexit news. That brought prices in WYNN down to weekly support @ $87.31.
Zeroing in for a swing trade, we could have waited for a signal on the 30 minute time frame. Here’s what it looked like week ended 7/3/2016:
So here are the things in play at that point:
- Prices at key weekly support, $87.31 – that’s when it showed up in the screener
- Pink Dots show us the Daily Resistance at around $94 – our first road block
- Blue dot signals buy on 30 min chart, representing prices reacting to the weekly support
- Even if prices are headed lower, prices will often drift a bit higher in reaction to support
- Stage 1, The Setup: Complete
Continuing in the next post: Stage 2: market reaction, Stage 3: breaking the first roadblock, and stage 4: second chance entries…
Also, with this series, we will be holding a 3-day sale for ‘back to school’, beginning August 17th. Summer is ending, which means the kids are headed back to school, and traders are also returning from vacation. That makes this the perfect time to get back into the swing of things before Q3 gets going. More details coming soon