CVNA - Stinky Fish Short Setup

Aug 11

As can be seen from past analyses of CVNA, they have rarely played out as expected. And yet – this time too, I will be trading CVNA short.

Why again?
Because it’s a setup that follows the rules of the Forks.

Setups are one part of a system.
Just one part – nothing more.

A setup has a statistical probability of generating a profit. But this probability only works if we play it as often as possible.

It’s like the lottery: if you don’t play, you can’t win. And just when you don’t play, you would have won ;-)
OK – in the lottery, the odds are inversely against the player.

This setup, however, has a positive expectancy. And that’s why I will also initiate a short this time.

Here are the triggers:
At (1) we see that the market suffered a sharp sell-off at a confluence point. This didn’t happen for no reason! At least from the perspective of technical analysis, specifically the rules of forks, the market reached an upper extreme – the U-MLH.

In addition, we also see one of the fork rule-book patterns occurring:

"If the market closes outside the fork, we can expect a test/retest back to the line."

Here, the yellow fork is meant:
The market opens and closes outside the L-MLH, reverses, and promptly tests the L-MLH before continuing down in the breakout direction.

So:
a) Yellow fork test/retest after breaking out of the fork
b) Reaching the U-MLH and sharp sell-off
= Short setup

The natural target is the equilibrium – the center-line (PTG1).
And another target for me, based on my experience, is the 1/4 line (PTG2) if the market breaks the CL.

I will execute my entry on a daily basis, possibly with options or a combination with the underlying.

Wishing you all much success!

Aug 18

Note

Retesting the L-MLH on the lower TF.