Here is an update on the "Preemptive Break Out Idea for DirecTV"
The main concept was to enter long DTV when price was cheap at $84.00, trusting that support buying will come in and push prices higher, leading to an eventual Pattern breakout.
Three Scenarios, labelled A, B and C were projected.
Worst case scenario C, where price trades lower below $82.00 was already ruled out in the previous update.
Also step 2 of the Trading Plan (take 50% partial profit) should have been executed by now.
We note that price has gently inched past of $88.50 with no signs of sharp selling.
Hence we can ruled out Scenario B, leaving Scenario A as the most likely scenario.
PREEMPTIVE TRADING PLAN
Current price levels are now ripe to execute Step 3 of the Scenario A Trading Plan:
Step 1 (Executed): Enter long when price can trade and sustain above $84.00, Stop Loss below $82.00
Step 2 (Executed): Next step will be to take 50% partial profit, when price trades around $87.00, and place your stop loss to breakeven level. This also means you are very unlikely to lose on this trade at this stage.
Step 3 (Execute Now): Wait for price to Break Out above $88.50 and go back long the 50% long position that was closed in Step 2.
With 50% position entered at $84.00 in Step 1, combined with 50% position added above $88.50 in Step 2, you will have effectively built a long Break Out position with a net average price of $86.50. Also the $87.50 will act as "protective shield" against retracements after the breakout. This due to the tendency for previous Resistance levels to become Support levels once broken)
Step 4 (At your Discretion): Shift Stop Loss to Breakeven Level and take profit as price trades towards $95.00.
A simple measurement of Profit Target places the objective to around $95.00, which incidentally is AT&T's offer price to takeover DirecTV.
SIMPLE BREAKOUT TRADING PLAN
For those who currently have no position in DTV can also trade the breakout move above $88.50.
Entry: When Price has a high probability of closing 03 March 2015 above $88.50.
Personally, this means waiting until 10 minutes before market close to see if price is still trading above $88.50 and enter long if that is true.
Stop Loss: Below $86.00
Take Profit: Around $95.00
There will always be a risk of a false breakout.
Also there maybe also other ways price can move not covered by the scope of Scenario .
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