CHTR, to long or to short.
Charter Communications (CHTR) reported earnings recently, and the stock closed up +16.62%. Despite the significant price increase, the earnings report itself did not justify such a dramatic rise. Instead, the movement can be attributed to the stock testing liquidity levels.
Understanding the Price Movement:
Liquidity Testing: Markets often move from one area of liquidity to another. Pre-market buyers anticipated this move once the stock surpassed the recent pivot at $340. The next significant liquidity level was around $374.42, approximately $375.
Intraday Reversal: Upon reaching this level, the stock reversed intraday and closed just below $370. This indicates that liquidity at this level was tested, and sellers stepped in.
Technical Analysis and Trade Plan:
Short Bias: The trade is short-biased if the stock closes below the $375 level with a bearish daily candle. This would indicate a rejection at the liquidity level and hold the character of a potential reversal.
Long Bias: For a long position, confirmation is needed with the stock closing above $373 on Monday with 1.5 times the relative volume (Rvol). This would suggest sustained buying interest and a potential continuation of the uptrend.
Volume and ATR Analysis:
Daily Candle: The daily candle on the earnings report day was above the Average True Range (ATR), indicating significant price movement.
Rvol: The Rvol was 2.94, showing a healthy volume that is expected for such an earnings gap.
Key Levels to Watch:
Above $375: If the stock can sustain above $375, the next target level would be $420, indicating a significant upside potential.
Below $375: If the stock closes below $375, the downside targets could be back to $340 - $320, suggesting a return to prior levels of support.
Charter Communications (CHTR) experienced a substantial price increase post-earnings, primarily driven by liquidity testing rather than the earnings report itself. Traders should watch for confirmation of direction by observing how the stock behaves around the $375 level with corresponding volume indicators. This will provide a clearer picture for either short or long trade setups.
Understanding the Price Movement:
Liquidity Testing: Markets often move from one area of liquidity to another. Pre-market buyers anticipated this move once the stock surpassed the recent pivot at $340. The next significant liquidity level was around $374.42, approximately $375.
Intraday Reversal: Upon reaching this level, the stock reversed intraday and closed just below $370. This indicates that liquidity at this level was tested, and sellers stepped in.
Technical Analysis and Trade Plan:
Short Bias: The trade is short-biased if the stock closes below the $375 level with a bearish daily candle. This would indicate a rejection at the liquidity level and hold the character of a potential reversal.
Long Bias: For a long position, confirmation is needed with the stock closing above $373 on Monday with 1.5 times the relative volume (Rvol). This would suggest sustained buying interest and a potential continuation of the uptrend.
Volume and ATR Analysis:
Daily Candle: The daily candle on the earnings report day was above the Average True Range (ATR), indicating significant price movement.
Rvol: The Rvol was 2.94, showing a healthy volume that is expected for such an earnings gap.
Key Levels to Watch:
Above $375: If the stock can sustain above $375, the next target level would be $420, indicating a significant upside potential.
Below $375: If the stock closes below $375, the downside targets could be back to $340 - $320, suggesting a return to prior levels of support.
Charter Communications (CHTR) experienced a substantial price increase post-earnings, primarily driven by liquidity testing rather than the earnings report itself. Traders should watch for confirmation of direction by observing how the stock behaves around the $375 level with corresponding volume indicators. This will provide a clearer picture for either short or long trade setups.
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