Albemarle (ALB) Is Currently At 205; Wait For Retracement At 215
Last week I suggested shorting Albemarle (ALB) if it pushed through the many levels of support and closed below 215 in price.
Technical analysis in the form of chart patterns like descending triangles, double tops, multiple downward spikes, an increase in volume on the uptrend, and the Fibonacci retracement along with a close below a long-term upward trendline suggested that it was poised to fall.
We couldn’t for sure confirm that it was in a downtrend because it had not yet been established with the 1-2-3 method.
There was also a large head and shoulders pattern that was not confirmed. However, closing at 211 (price) on the 24th of January confirmed this pattern.
Your profits would have been massive if you had jumped in short 215 as I suggested and placed a tight stop just above one of my resistance levels (between 216 and 219). A bailout when the price reached its floor of 196, anything between 4.5 and a 9 to 1.
Take into consideration that all the confluence pointed to a massive drop, and in these situations, I like to keep my stop-loss tight to maximize profit-taking. It is risky, and there is a chance you may get stopped out, but that occurs with every trade. I was spot on in this scenario, and a 9 to 1 win is a pretty sweet deal.
Now, if you missed the trade and are kicking yourself (and you should be), don’t worry because the retracement is in progress. Using the Fibonacci retracement again, we can see that the 38% level is at 215, exactly right up against all those resistance (former support levels) levels.
It is highly unlikely that Albemarle (ALB) is going to recover from this price drop in the next couple of days.
We can now be on the lookout for a symmetrical triangle (created by the new low at 196) and a possible channel establishing the downtrend further.
If you are brave enough, you can put in a limit at 215 and place your stop-loss at 216. If prices drops to 196, your profits will be 19 to 1. Remember that besides having all the resistance at 215, 215 is a round number where many traders are possibly holding their position. This means that price will most likely find it difficult to move higher.
This also means that the price may not hit 215 because of the number of traders who have shorted there, so it's better to get in at 214.
A healthier (and smarter) trade would be to put your limit in at the Fibonacci retracement level of 38% (price 215) and put your stop-loss above the 50% Fibonacci level (price 221). This will give you ample stoppage room and space for the trade to breathe when it attempts to retrace to its highs.
This will prove difficult because of all the resistance in its way, though. Take into consideration that price may push to the Fibonacci 50% or 62% levels because of the channel forming before the drop continues.
Technical analysis in the form of chart patterns like descending triangles, double tops, multiple downward spikes, an increase in volume on the uptrend, and the Fibonacci retracement along with a close below a long-term upward trendline suggested that it was poised to fall.
We couldn’t for sure confirm that it was in a downtrend because it had not yet been established with the 1-2-3 method.
There was also a large head and shoulders pattern that was not confirmed. However, closing at 211 (price) on the 24th of January confirmed this pattern.
Your profits would have been massive if you had jumped in short 215 as I suggested and placed a tight stop just above one of my resistance levels (between 216 and 219). A bailout when the price reached its floor of 196, anything between 4.5 and a 9 to 1.
Take into consideration that all the confluence pointed to a massive drop, and in these situations, I like to keep my stop-loss tight to maximize profit-taking. It is risky, and there is a chance you may get stopped out, but that occurs with every trade. I was spot on in this scenario, and a 9 to 1 win is a pretty sweet deal.
Now, if you missed the trade and are kicking yourself (and you should be), don’t worry because the retracement is in progress. Using the Fibonacci retracement again, we can see that the 38% level is at 215, exactly right up against all those resistance (former support levels) levels.
It is highly unlikely that Albemarle (ALB) is going to recover from this price drop in the next couple of days.
We can now be on the lookout for a symmetrical triangle (created by the new low at 196) and a possible channel establishing the downtrend further.
If you are brave enough, you can put in a limit at 215 and place your stop-loss at 216. If prices drops to 196, your profits will be 19 to 1. Remember that besides having all the resistance at 215, 215 is a round number where many traders are possibly holding their position. This means that price will most likely find it difficult to move higher.
This also means that the price may not hit 215 because of the number of traders who have shorted there, so it's better to get in at 214.
A healthier (and smarter) trade would be to put your limit in at the Fibonacci retracement level of 38% (price 215) and put your stop-loss above the 50% Fibonacci level (price 221). This will give you ample stoppage room and space for the trade to breathe when it attempts to retrace to its highs.
This will prove difficult because of all the resistance in its way, though. Take into consideration that price may push to the Fibonacci 50% or 62% levels because of the channel forming before the drop continues.
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