Friends,
Before we begin, it's worth noting that this move would realise you massive profits if all the criteria plays out properly (The stock could lose 50% of its value!)
We have a bearish flag pattern forming on Halcon Resources.
As we can see on the chart, the stock has been rebounding off the 20EMa for some time now, and this resistance was confirmed within the flag where we saw a bearish engulfing pattern followed by a doji, a gap down doji, and a bearish engulfing signal again. Confirming indecision/slight bearish sentiment, the real confirmation will be the break of the flag to the downside making this a powerful short.
There's 2 stop loss situations as you can see. I will address both of them and my reasons for doing so.. Number 1 will be the left open P&L diagram, and the right one will represent number 2.
(my target for this pattern was calculated using the normal rules of a bear flag pattern.)
1)the stop loss was calculated on the basis that the stock was able to break above the 20EMA, then this shows that the bears aren't in control at the moment.
2)This stop loss was calculated, by assuming that if the stock was to go above the last bearish engulfing signal we saw on the last day of trading, then the bears may not be in control.
I am personally using the 2nd scenario as my guidance. As I think the bears should be showing themselves by now after what we've seen. You might have also noticed you get some impressive R/W ratios with this trade as well. And the trade is high probability of panning out providing we get an open lower tomorrow. I feel if the stock opens lower tomorrow this move might take place with force.
Good luck traders-
Tom
Before we begin, it's worth noting that this move would realise you massive profits if all the criteria plays out properly (The stock could lose 50% of its value!)
We have a bearish flag pattern forming on Halcon Resources.
As we can see on the chart, the stock has been rebounding off the 20EMa for some time now, and this resistance was confirmed within the flag where we saw a bearish engulfing pattern followed by a doji, a gap down doji, and a bearish engulfing signal again. Confirming indecision/slight bearish sentiment, the real confirmation will be the break of the flag to the downside making this a powerful short.
There's 2 stop loss situations as you can see. I will address both of them and my reasons for doing so.. Number 1 will be the left open P&L diagram, and the right one will represent number 2.
(my target for this pattern was calculated using the normal rules of a bear flag pattern.)
1)the stop loss was calculated on the basis that the stock was able to break above the 20EMA, then this shows that the bears aren't in control at the moment.
2)This stop loss was calculated, by assuming that if the stock was to go above the last bearish engulfing signal we saw on the last day of trading, then the bears may not be in control.
I am personally using the 2nd scenario as my guidance. As I think the bears should be showing themselves by now after what we've seen. You might have also noticed you get some impressive R/W ratios with this trade as well. And the trade is high probability of panning out providing we get an open lower tomorrow. I feel if the stock opens lower tomorrow this move might take place with force.
Good luck traders-
Tom