OGE Short Trading Plan Update: Time to Take Profit

29 thg 6, 2015

Hi all,

This is an update to the Short OGE Trading Plan, which is about Trading a Double Top Pullback.

Update as of 29 June 2015:
Market has plunged sharply down from $31.20 in the last update to as low as 28.65 on 25 June, and currently hovering at 28.80s.

At this point, the bears have used up much bearish momentum pushing the price to $28.65 and we are see signs of support/ profit taking from the short positions.
For those familiar with Elliott wave, you can recognize that price is likely to try for one more short push towards $28.00.

To re-phrease, yes there is still a bit of momentum for price to try trading towards $28.00.
However, during this attempt it is reasonable to see profit taking and support buying going against this last push down to $28.00.
Hence, we are likely to see choppy trading while price drifts lower in the overall bearish environment.

Taking Profit:
For those who have stuck with the plan and took profit at around $29.00, especially during on 25 June, I congratulate you for following the plan and a trade well done.

For those who have yet to take profit, now might be a good time to take your profits, at the very least closing part of your position out at current price levels.
Given, that a huge bearish momentum has been spent driving prices down from $31.20 to $28.00, it will be rational to close out at the very least 60% of your short position and leave the rest to run.

After all, what's not to like in locking down a 9% Spot Price movement?

Sitting Tight and Leaving a Bit of Money on the Table:
For those who still want to stay short and ride the push towards $28.00, please be mentally prepared to withstand choppy price movements.

Reason being>
a) There is lesser bearish momentum now, therefore there are now lesser traders willing to add short positions and put in selling pressure to the price.
b) Profit taking (buying) is very reasonable to come into play at this levels, creating support for the price.
The closer the price gets towards $28.00 the more likelihood of buying support to come in.

Risk:
By now the risk of the trade becoming a loss is very remote.
At this stage it is a matter of how profitable the market allows you to be and your personal decision when to close out.
At least setting a Stop Limit at $30.00 will be reasonable if you intend to keep your short positions open.

References:
Double Top: stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:double_top_reversal
How to Short a Stock in Double Top Pattern Strategy: simple-stock-trading.com/how-to-short-a-stock.html
Using Support and Resistance Levels of Relative Strength Index> Technical Analysis for the Trading Professional by Constance Brown, Chapter 1: Oscillators Do Not Travel between 0 and 100.

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