AGIO H&S short

Sifting through the biotechs I came across this head and shoulders opportunity. Volume pattern confirming so far. We might be close to breakdown. Also notice the RSI trend and latest high right around 51. I suggest a stop above 110, which is about 2x ATR and gives some room. The biotechs as a group are pretty bullish at the moment, so this trade could act as a nice hedge.
Looks like a proper H&S.

How will you trade it?

I'd wait for it to move away from the price level in my chart...Otherwise it might go back above it, or just move sideways.
Perhaps selling calls is in order? I'm an options newb, but there's no clear sell signal yet in there, the last downbar isn't considerably strong, going by ATR, but it did close below support.
+1 Reply
Gnome IvanLabrie
I would probably see how it opens on monday, if we get a lower low with some momentum, that could be an entry. With a little tighter stop above 109 and if we take the potential support zone around 86 as a target, you can almost squeeze a 3:1 risk reward out of it. I will probably trade it like that, take some profit if it hits that level and if everything goes smooth try to reenter on a pullback for a retest of that 86 support. Since this is in the bullish/volatile bio group we have to be careful though.

How would you trade it?

I'm more of a Tim Westian guy myself. I'd wait for a setup per my rules, H&S is not something I trade anymore. A nice BB squeeze and breakout would be nice to see, something bigger than atr heading down. Not such thing yet.
+1 Reply
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