The previous post we looked at the perspective of holding a potential long position in WYNN, as prices started up off a sweetspot trade setup & the signal rolled into the daily. As I do in the Q&A call (2:49), I will try to talk about observations from two perspectives: holding the position & observing/on the sidelines:
If you are an observer/on the sidelines:
If you’re not involved with a position from stage one, usually it is a good idea to let the market prove itself by going up & waiting for a pullback. If prices start to run off a daily buy signal, it can be temping to try to chase it. I favor waiting for a signal
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Key Takeaways:
- You can risk missing the position as an observer – don’t worry, there are many opportunities
- This trade setup is similar to that of stage one (e.g. long from $97.65, with room for prices to go up to the high at $104.91 first road block)
- Get out if prices break the August 1st low @ $94.82
- Look for a chance to reduce variance by ‘foraging on the enemy’
Alternatively, we happened to have a relatively low risk buy signal on the 30 min chart during the congestion phase at around $95.64:
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I almost always prefer to look for a sweet spot, but here are a few key considerations for a slightly riskier play:
- We saw prices continue to react positively at the daily resistance – prices put in a higher low at $90.78, and a higher high at $96.90
- There is a double bottom around $93.19, and a 30 min reversal buy signal
- The price action seems to suggest that the direction is up, but the trade has to be correct & does not have the benefits of the sweet spot
- In other words: the probabilities may be favorable but the odds(pay off) are not
- Must take some off after break out as prices came back & beyond even at $94.82
From a results oriented standpoint, the congestion buy signal works out, but as you will see in the coming posts, there are lots of opportunities setting up at different stages.
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