If you were following my earlier , you'll see that we bought the H&S breakout once it had retraced and rejected the neck line. We had a few interesting moments on the way to opening this trade, at being close to pulling the trigger on a sell. This update outlines my plans for managing this trade by building on the mantra, "stop your losses quickly but let your profits run".
Trade Entry: 8,856 Stop Loss : 7,730 Target: 11,500
Where we are We are either forming an ABC correction or 5 wave impulse. Whilst my conviction is that it will be a 5 wave impulse, I want to create the flexibility to profit from either.
Likely resistance and reversal levels are shown on the chart in blue: 9,600 - 0.5 Fib of Bear Wave 5 (BrW5) & top of the Last Leg of Bear Wave Five and bottom Bear Wave 3 10,300 - 0.618 BrW5 and 1.44ext on leg A/i 11,500 - 0.78 BrW5, diagonal down trend, H&S projection
Current plan My current plan assumes a relatively simple and straight forward movement up to some of these levels. This is unlikely to happen and I will adapt my plan as we move through the coming period. For now, it is as follows:
1. Let this run through past 9,600. 2. Take 25% profits at 10,300 and move my stop loss to the bottom of the two green diagonal lines (e.g. 8500). Taking this level of profits and moving the SL to that point will mean that I can allow the rest of the 75% to run 'risk free'. 3. Monitor what happens around 11,500. *IF* we get this far, I find it difficult to believe we will not at least see some short term retrace here so I will likely sell and look to enter a new trade on a retrace.
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9,600 resistance was easily broken, hardly pausing for breath. 1HR and 4HR RSI is in the overbought territory (70+). If this doesn't pause before 10,500 my conviction is it will retrace around this level, although I'm less opinionated about by how much, probably to 9,500 or the H&S neckline. I'll look to make last my trade risk free by taking my 25% profit with a STOP and moving my stop loss up. I may sell some of my 6k buy, depending on what I see, with the aim of buying back in at the retrace.
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25% taken at 10.5k. Stop loss moved up. I’m now risk free. 11.5k-12k is a key area. Potential for a large reversal here so I’ll be watching it closely....
Thanks for your analysis, its working spot on till now.
monkia
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@Vikas.programmer, thx! Getting the 11.5k area right is the crucial decision. We break it, more likely to hit ATH, reject it, more likely to double bottom at 6k or lower.
vikas.programmer
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@monkia, Is it wise to enter the market now, for short term?
vikas.programmer
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@Vikas.programmer, what is the likelihood of minor pull back to 10,000-10,300?
monkia
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@Vikas.programmer, difficult to call. For any trade I consider what the target is and where I would put the stop loss. I ask if these both look like reasonable areas and if they give me enough risk reward (usually 2 or 3 to 1). From here my target is 11.5k and I moved my stop loss to 8.5k on the previous trade I entered. 1k reward for 2k risk. Another SL are could be below the 9.5k, giving a 1:1, still not for me.
monkia
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9,600 resistance was easily broken, hardly pausing for breath. 1HR and 4HR RSI is in the overbought territory (70+). If this doesn't pause before 10,500 my conviction is it will retrace around this level, although I'm less opinionated about by how much, probably to 9,500 or the H&S neckline. I'll look to make last my trade risk free by taking my 25% profit with a STOP and moving my stop loss up. I may sell some of my 6k buy, depending on what I see, with the aim of buying back in at the retrace.
gusccbb
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Excellent analysis Thanks for sharing.
monkia
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I'm not ruling out a retest of the H&S neckline (8800). A retract and rejection would signal a lower risk trade and provide me with an opportunity to increase the position size.