Stops should be above this week's high (trading range).
Expecting to see a sharp decline to ensue here in the intermediate term.
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Link to Tim West's chatroom: https://www.tradingview.com/chat/#c8BzrhGRvXxGXWnJ
We discuss setups like this often there. Feel free to stop by and subscribe to his indicator pack. If you have any questions ask.
If we do get new lows you may buy at the money puts for instance.
Stops are really tricky, the ATR thing is what Ivan calls a Swiss army knife tool, I can see why it is really useful. Very often we just use support areas for stops, which is valid, but sometimes the bar just crosses past support tripping the stop loss and then moving back in the direction we needed.
So basically, just using support is not good, recent price volatility also needs to be factored in, and that is what ATR does.
BUT, we should use 1-3 ATR ranges, Tim uses 3, Ivan uses between 1-3. I am not sure when he uses 1 and when 3. But I think that can completely change the dynamic of the trade. What I do know is that it is very good to go and check where the 3 ART stop would be, because often, it shows you a WTF number. And you realize that the stop should have be much much deeper, and that the RR ratio would not be so good then.
Thing is, like I said, I see many people being stopped about after calling the overall direction correctly. Hmm tricky subject this is.