themarketzone

Survey - What would you do in this scenario

NASDAQ:IBB   ISHARES NASDAQ BIOTECHNOLOGY INDEX FUND
130 7 6
This is a chart that I sent to my members today.
It presents two potential trades on IBB:

1. Bullish (short term) setup - 270$ is the key zone as it presents a weekly support zone .
2. Bearish continuation (based on longer term analysis) - Continuation of the the waterfall that started on May 2015.

Waiting to here your thoughts.

Comment: Despite Trump's comments, IBB holds the bottom of the channel.
270$ is nearest support.
How you can predict a so deep waterfall for a so long period? Only watching at RSI ? Or are there other implications that support your long term idea?
+1 Reply
@Guybrush80, I wasn't predicting the waterfall... we had a pattern for IBB back than. It has now reached the final target zone of May's setup... the question is where are we going from here? Any thoughts?
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ibb goes down
+1 Reply
Down. It has bounced of the 34 MA three times now, the momentum is down. It is rhyming with the consolidation pattern of the last half of 2015, except 2016 is much bigger, thus a much bigger drop. I expect 250 by year end as tax loss selling accelerates. Looking for a drop down to 225 no later than the second week of February. Trump has already expressed interest on cracking down on price gouging and the imminent repeal of Obama care casts a pall of uncertainty over the entire sector.
+1 Reply
Just my 2c worth ...
I would short at 290
Place stop at 305
Looking for a move to 220
R/R 15/70:= 5:1
This looks like a bull flag in a downtrend and your RSI indicator is midstream
... for what it is worth
+1 Reply
@Oh_If_Only, Thanks.
I'm interested... why 305$ as stop loss? Buffer above 300$
There's a minor structure near 308$ but I guess that's the same.

I agree with you analysis. One clarification - For it to reach 220$ it must break below the Flag pattern... that's the critical confirmation signal
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Oh_If_Only themarketzone
@themarketzone,

Thank you for your interest.
$305 was the support area in the late Sept flag. $300 is "too round", so allow for some small slippage on the upper pins as well. I need a close above/below my SL to trigger, not intraday.

I prefer to draw my lines off the candle bodies. So I see the lower flag boundary at closer to $255.
So $255 - ($300 - $255) = $210 as a guide, but there appears to be some solid support at $215, so being cautious, I would be happy to take money off the table at $220.
So, if I had 5 contracts, I would sell 3 and let the remaining 2 run, and use my ADX indicator/candles to give me a final Sell alert.

The flag break down trigger, will be a close under the lower boundary. A decisive break and rebound (retest) could be a potential second sell area. But more importantly, I would be running a medium term SMA to give me trend direction, and your SMA 50 tells me it is Down. So don't fight that.

I use patterns and price volume relationships (classic theory) as my main guide. Indicators are just other names for price - that is where they are sourced. Candles and ADX provide my fine tuning and math provides me my analysis.

Just my 2c worth ...
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