CanOz
Home runs feel good, but base hits pay bills!
- Joined
- 11 July 2006
- Posts
- 11,543
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- 519
Tesla has been tracing a well know bearish pattern, the head and shoulders. It has broken the neckline and is at the typical 'throwback' or 'retest'. There are a couple of ways to play this but i like 'looking inside the bars' and determining what the market structure tells me could be the best entries and stop locations.
To do this i use volume profile on an intra-day chart.
Examples of two ways to play this as a swing trade:
You can clearly see on the price action above the gap we have a double distribution pattern. Statistically the lower half of the distribution usually gets a re-test more than 50% of the time, so 215.98 becomes our aggressive entry. The stop is placed above the value area of the higher distribution. If we prefer to wait for more downward price action then a more 'conservative' entry could actually be the gap play, with a stop above the low volume node at 215.29
The target area for this pattern is around the 149.75 area, which is a measured move from the high, to the 'neckline' and also coincides with a prior VWAP. These prior areas of 'value' are almost 'magnetic' targets.
Trade it well....
To do this i use volume profile on an intra-day chart.
Examples of two ways to play this as a swing trade:
You can clearly see on the price action above the gap we have a double distribution pattern. Statistically the lower half of the distribution usually gets a re-test more than 50% of the time, so 215.98 becomes our aggressive entry. The stop is placed above the value area of the higher distribution. If we prefer to wait for more downward price action then a more 'conservative' entry could actually be the gap play, with a stop above the low volume node at 215.29
The target area for this pattern is around the 149.75 area, which is a measured move from the high, to the 'neckline' and also coincides with a prior VWAP. These prior areas of 'value' are almost 'magnetic' targets.
Trade it well....