Here is an update on the "Preemptive Break Out Idea for DirecTV"
(1) 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 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.
(2) We note that price has recently found support at round $84.50, followed by a strong move to 87.70s now. Hence we can now ruled out Scenario (B), leaving Scenario (A) as the likely path price will follow.
(3) Please prepare to execute Steps 3 and Steps 4 of the Scenario (A) Trading Plan:
(Scenario A) 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 (Pending): 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 level will act as "protective shield" against retracements after the bullish breakout. Step 4 (Pending): Shift Stop Loss to Breakeven Level and take profit as price trades towards $95.00.
(4) Take note that price may not necessary break out now, there we may expect some minor pullback, since price is trading at resistance levels now.
(5) A simple measurement of Profit Target places the objective to around $95.00, which incidentally is AT&T's offer price to takeover DirecTV.
(6) For those who currently have no position in DTV can also trade the breakout move above $88.50. Entry: When Price breaks out above $88.50 Stop Loss: Below $86.00 Take Profit: Around $95.00
(Risk) 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 (A). Lastly the upcoming Earnings Announcements may have an negative impact on prices, which cannot be projected using Technical Analysis.