Today’s Featured Trade Idea is WETF.
Members can join us in Trading Room #1 as Rick reviews the WETF 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.
Trader Vision told us that we have just less than a month prior to the next earnings. So, while the chart itself might call for a 3-Target trade, we may not have time to achieve this prior to earnings. As a result, I have planned this trade two different ways. Fortunately, TV20/20 makes it easy to do various scenario plans.
WETF has been in a long-term downtrend. However, after forming a bottom for 6-7 weeks, the Bulls have stepped in to begin a rally that has lasted several weeks so far. Last week it broke into a Rounded Bottom Breakout pattern and on Friday it completed a Morning Star type signal.
I will be looking for a positive trading Entry, using a Stop basically at the 50sma along the bottom of the last 3 candle bodies. If it goes back below that point, I don’t want to be long this chart. Targets are defined off long-term charts, but you can see how they have provided S/R on the daily chart as well.
While the chart calls for 3 targets, based on obvious S/R Levels, we may not have time to reach all 3 prior to earnings. Fortunately, Trader Vision makes it easy to plan multiple scenarios. So I will show both 2 target and 3-target plans.
Trader Vision shows us we have about a month until earnings. It also shows us we have 4 bullish conditions (I’ll call that 5 because it is close enough for a Morning Star for my eye) and 2 bearish conditions. This is as expected since the long-term downtrend has not reversed yet and the overall market is still in a short-term pullback.
TV20/20 tells us the 2-Target plan can achieve 2.88:1 overall ($402.50/$140). It also says WETF needs to reach $9.20 (10-15cents above target #1) in order to make the goal on this trade.
In this alternative version of the trade plan, TV20/20 tells us that if we can reach all 3 targets, we can have an almost 11% winning trade. It shows us that selling in a 200/200/100 pattern we can achieve $461 in profit while risking that same $140.
Obviously, this is predicated on a big move in the 1 month we have prior to the next earnings. However, it stays in line with the rule of getting better than 2:1 at the 1st Target and this plan can achieve 3.29:1 overall.
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 WETF Trade Setup – As of 9-27-18
The Trade Plan A
The Trade Plan B
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, 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/D2DVmYnaCdU” 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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Today could be a very interesting Bull and Bear battle. At this time the Bulls continue to hold the high ground with the DIA, SPY, and QQQ holding onto current trends. However, with the US Futures currently pointing to a gap down open this morning, the bears have a chance to produce a bearish Island Reversal pattern.
A huge bullish gap to begin the first day of trading of the 4th quarter after inking a new trade agreement between the US and Canada fired up the futures last night. Asian markets closed up across the board, and European markets are currently showing green across the board. As I write this, US Futures suggest a huge morning gap 200 points.
The light volume choppy rally yesterday was ultimately unable to hold onto gains by the end of the day leaving more questions than answers. There were noticeably fewer companies moving up supporting the rally. There is nothing in the charts that’s particularly bearish, but I do think there is a reason to be a little cautious as we head into the weekend.
