Preemptive Break Out Plan For DirecTV> Execute Step 3

2 thg 3, 2015

Hi all Fellow Risk Takers,

Here is an update on the "Preemptive Break Out Idea for DirecTV"

PREVIOUSLY
The main concept was to enter long DTV when price was cheap at $84.00, trusting that support buying will come in and push prices higher, leading to an eventual Rectangle Pattern breakout.

Three Scenarios, labelled A, B and C were projected.

Worst case scenario C, where price trades lower below $82.00 was already ruled out in the previous update.
Also step 2 of the Trading Plan (take 50% partial profit) should have been executed by now.

CURRENTLY
We note that price has gently inched past Resistance level of $88.50 with no signs of sharp selling.
Hence we can ruled out Scenario B, leaving Scenario A as the most likely scenario.

PREEMPTIVE TRADING PLAN
Current price levels are now ripe to execute Step 3 of the Scenario A Trading Plan:

Step 1 (Executed): Enter long when price can trade and sustain above $84.00, Stop Loss below $82.00
Step 2 (Executed): Next step will be to take 50% partial profit, when price trades around $87.00, and place your stop loss to breakeven level. This also means you are very unlikely to lose on this trade at this stage.
Step 3 (Execute Now): Wait for price to Break Out above $88.50 and go back long the 50% long position that was closed in Step 2.
With 50% position entered at $84.00 in Step 1, combined with 50% position added above $88.50 in Step 2, you will have effectively built a long Break Out position with a net average price of $86.50. Also the $87.50 Support level will act as "protective shield" against retracements after the bullish breakout. This due to the tendency for previous Resistance levels to become Support levels once broken)

Step 4 (At your Discretion): Shift Stop Loss to Breakeven Level and take profit as price trades towards $95.00.

A simple measurement of Profit Target places the objective to around $95.00, which incidentally is AT&T's offer price to takeover DirecTV.

SIMPLE BREAKOUT TRADING PLAN
For those who currently have no position in DTV can also trade the breakout move above $88.50.
Entry: When Price has a high probability of closing 03 March 2015 above $88.50.

Personally, this means waiting until 10 minutes before market close to see if price is still trading above $88.50 and enter long if that is true.

Stop Loss: Below $86.00
Take Profit: Around $95.00

RISK
There will always be a risk of a false breakout.
Also there maybe also other ways price can move not covered by the scope of Scenario [A].

REFERENCES
Rectangle Chart Pattern>babypips.com/school/middle-school/important-chart-patterns/rectangles.html

Like it, Share it, Follow it~

Trading View: BreakOutArtist
StockTwits: stocktwits.com/BreakOutArtist
Twitter: twitter.com/BrkOutArtist