Today’s Featured Trade Idea is JNUG.
Members can join us in Trading Room #1 as Rick reviews this setup and other Trade-Ideas at 9:10am Eastern. For now, here are my own analysis and a potential trade plan made using our Trader Vision 20/20 software.
Note: Beware the overall market indecision. Mixed trends (short and long term) and very volatile action (many “gap and fade” as well as intra-day reversals) make this a treacherous market.
JNUG has recently stopped it’s long-term downtrend and formed a bottom. In fact, you can see an inverted Head and Shoulders pattern bottom. Last week it also broke into a Rounded Bottom Breakout (RBB) pattern. Finally, on Friday it formed a Doji Continuation Signal setup. So I will be looking for follow-thru to complete that signal.
It must be said, this is a very risky market to be trading. The overall market is very over-extended to the downside. However it is also very volatile. (In this case, we can see the Volatility Stop indicator dots and how far they are from price now.) These are both warnings to avoid trading unless you are very quick, very diligent and experienced. Frankly I will likely sit this day out until a better market trend emerges.
That said, in this setup I will look for a breakout Entry a tight Stop (too tight?) and a Target set off a Weekly chart.
This would lay out as a better trade if we could use the 2nd s/R level above as Target. My fear of doing so comes from Junior Miners beginning to report in the next 8-10 days.
Trader Vision shows us that as an JNUG has no earnings report to worry about. However, as an ETF, it’s underlying stocks will report and this could cause trouble in the next 10 days. It also tells us that this is a very dicey market to be trading. JNUG shows 3 Bullish and 3 Bearish conditions and no signal. However, it is set up for a potential signal and is working on a RBB pattern. The real concern is shown in a red box. Both the market and the ticker are in short-term trends that counter their long-term trends. This is indecision.
TV20/20 tells us that even though we tightened the Stop, we cannot achieve our Trade Goal with this plan. However, we can achieve a greater than 2:1 Reward/Risk. Bear in mind that this may be false comfort as the more volatile chart of recent days mean a higher probability of Stop-out.
Having this knowledge before a trade is even entered makes it much easier to control emotions and maintain discipline.
Below is my markup of the chart and the trade plan as laid out by Trader Vision 20/20. As a bonus, if you click the green button below, you’ll be able to watch a video of the chart markup and trade planning process.
The JNUG Trade Setup – As of 10-12-18
The Trade Plan
Note how Trader Vision 20/20 does so much of the work for you. Knowing the ratio of Bullish Conditions to Bearish ones as well as the overall risk of the position size, the risk to Stop out and the Reward possible at each Target price can help a great deal with controlling our emotions. Knowing the dollar impact of every scenario ahead of time, allows us to make calm decisions during the trade. It really takes the pressure off. No guesswork. No surprises. No emotional roller coaster.
To see a short video of this trade’s chart markup and trade planning, click the button below.
[button_2 color=”light-green” align=”center” href=”https://youtu.be/tNpNjgX4HTE” new_window=”Y”]Trade Plan Video[/button_2]
Put the power to Trader Vision 20/20 to work for you…
[button_2 color=”orange” align=”center” href=”https://hitandruncandlesticks.com/product/trader-vision-20-20-monthly-subscription2/” new_window=”Y”]TV20/20 Software[/button_2]
Testimonial
Trader Vision immediately simplified the process…immediately it provided that information and guidance to me. I knew what I would risk for how much reward, I began taking trades off at the 1st target, 2nd target, I was no longer holding all my trades for the homerun. I also began implementing the stop losses if and when they were reached, not just hoping the stock would recover. It then became easier to see what patterns were working for me and which were not. It provided a much more relaxed and stress-free environment. –Joan G
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Investing and Trading involve significant financial risk and are not suitable for everyone. Ed Carter is not a licensed financial adviser nor does he offer trade recommendations or investment advice to anyone. No communication from Hit and Run Candlesticks Inc. is to be considered financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
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Trading during the volatility of a major selloff is always challenging but double up on the volatility adding in an earnings season, and traders will likely find it very difficult to maintain an edge. Trading without an edge is gambling with the house odds stacked heavily against you. Gambling can certainly be exciting at the beginning but keep in mind at the end of the day there are no medals for bravery in the market.
With the ramp of 4th quarter earnings season coupled with high volatility of the recent selloff, expect daily market gaps and possible overnight reversals to make swing trading very challenging over the coming weeks. Fast morning price action with whipped up emotion as result roll-out will likely produce a lot of head fakes whipsaws in the intra-day price action.
I always find it amazing how a market selloff brings out a litany of talking heads with predictions of new highs or outlooks of gloom and doom as if they have the power to see the future. It’s honestly laughable because most of them are just talking up their positions. I submit to you that listening to all that noise is unproductive and very likely damaging to your trading success.
