AMD + The Power Of Confluence - Measured Move & Target Levels
Hello Traders, here is my analysis for AMD. - I apologize for the crammed chart, I did the best I could to keep the chart as simple yet detailed as possible. - Onto the analysis...
First off, if you're a new trader, this chart is an example of what the planning process for a swing trade could look like. Of course there are many different strategies, but for me this is the process I go through when planning a trade.
***Before I start with the breakdown, I want to point out how amazing TA can be: If you look at the chart, at the ("4)Bounce/Rally Target Level") at $85.50. That target was taken from finding the average % gain of the prior 3 bounces (36.76%) and projected it from $62 (Probable bottom). Whats so amazing is that the $85.50 level is also key resistance and directly at the descending trendline. - This amount of confluence tells me that there is a high probability that this move could play out in a similar fashion.
Like many other charts, AMD is overdue for a bounce... The questions that need to be answered are:
1) What level do I think it will bounce from?
2) What is the potential profit target?
3) Where do I enter positions?
1) "Where do I think it will bounce from?"
- To answer this, I used technical analysis to come up with the most probable level for a bottom.
- $62 is where I believe AMD is most likely to bounce from.
*As you can see AMD is oversold, this tells me that the sellers are likely becoming exhausted and will eventually stop selling.
*It looks as though AMD may make a measured move (measure the prior high to swing low = 25.63% - Project 25.63% from the swing high at $85.5 = $62)
*The measured move to $62 also happens to be a Gap Fill level which adds confluence to this potential target and adds confidence to this level being a bottom.
2) "What is the potential profit target?"
- The potential profit target for a bounce is $85.50 (This is from being projected off $62)
*I took the averages of the prior three bounces (36.76%) and projected it from the "probable bounce level"
3) "Where do I enter positions?"
- First off, you never want to try and time the bottom for one entry. It's rare that anyone consistently can time bottoms.
- More often than not you'll miss entries this way.
*What you want to do is figure out where you think price will likely bounce from, in this case $62 and enter multiple positions at key support levels on the way down.
*As you can see I've labeled Entries 1-3 on the chart.
*Enter small positions (start with 1% - 2% of your portfolio)
*You never want to be in a position where one trade can wipe you out.
*Entering large positions is not trading, it's gambling. You increase the risk to a point where the probabilities are no longer in your favor.
*Entering small positions ensures stability and longevity as a trader.
That's it, I know it was long but I hope that this was informative.
Thanks everyone and best of luck trading!
First off, if you're a new trader, this chart is an example of what the planning process for a swing trade could look like. Of course there are many different strategies, but for me this is the process I go through when planning a trade.
***Before I start with the breakdown, I want to point out how amazing TA can be: If you look at the chart, at the ("4)Bounce/Rally Target Level") at $85.50. That target was taken from finding the average % gain of the prior 3 bounces (36.76%) and projected it from $62 (Probable bottom). Whats so amazing is that the $85.50 level is also key resistance and directly at the descending trendline. - This amount of confluence tells me that there is a high probability that this move could play out in a similar fashion.
Like many other charts, AMD is overdue for a bounce... The questions that need to be answered are:
1) What level do I think it will bounce from?
2) What is the potential profit target?
3) Where do I enter positions?
1) "Where do I think it will bounce from?"
- To answer this, I used technical analysis to come up with the most probable level for a bottom.
- $62 is where I believe AMD is most likely to bounce from.
*As you can see AMD is oversold, this tells me that the sellers are likely becoming exhausted and will eventually stop selling.
*It looks as though AMD may make a measured move (measure the prior high to swing low = 25.63% - Project 25.63% from the swing high at $85.5 = $62)
*The measured move to $62 also happens to be a Gap Fill level which adds confluence to this potential target and adds confidence to this level being a bottom.
2) "What is the potential profit target?"
- The potential profit target for a bounce is $85.50 (This is from being projected off $62)
*I took the averages of the prior three bounces (36.76%) and projected it from the "probable bounce level"
3) "Where do I enter positions?"
- First off, you never want to try and time the bottom for one entry. It's rare that anyone consistently can time bottoms.
- More often than not you'll miss entries this way.
*What you want to do is figure out where you think price will likely bounce from, in this case $62 and enter multiple positions at key support levels on the way down.
*As you can see I've labeled Entries 1-3 on the chart.
*Enter small positions (start with 1% - 2% of your portfolio)
*You never want to be in a position where one trade can wipe you out.
*Entering large positions is not trading, it's gambling. You increase the risk to a point where the probabilities are no longer in your favor.
*Entering small positions ensures stability and longevity as a trader.
That's it, I know it was long but I hope that this was informative.
Thanks everyone and best of luck trading!