I don't normally mess with penny stocks, though a whole lot of them have been doing quite well during this bull cycle. Someone in a Discord server I'm in asked about our thoughts on $KBNT, and I apologized with some technical analysis. In fact, I probably over analyzed it. While there's a bunch of potential scuffed harmonic patterns that could (or likely would not) start closer to the developing area of value (the thin blue line), really, the thing is just most attractive to me as a trade setup by operating purely on Fibonacci retracements, historical support at $5.29, and the developing Class A Hidden Bullish Divergence.
Maintaining a Risk/Reward Ratio of 3 to 1, we could place our stop below the $5.29 historical support, specifically $5.17 to risk roughly 22% of our position, and only need to stay in the trade long enough for the price to reach Dow's 50% retrace of roughly $11 to take a profit of 66% (We will sell 50% of our position here). After that, we would raise our stop loss to either our entry level, or if we want to be bolder, raise it to the 22% gain level above our entry point to insure we are playing with the house's money. If it then rose to the .618 golden retrace, we could take profit again for 85% gain by selling 50% of the remainder of our position again. At that point you could set your third take profit level to the end of the golden retrace, the .786, but I figured "Hey, it's take profit 3, why not shoot for the moon a bit?" and set it to the 0.886 for a third take profit of 125%, and we could do so by selling 60% of the remainder of our position. From that point, we could set a Take Profit 4 at one of the Fibonacci Extensions like the 1.172 or the 1.414, while setting a trailing stop of ... oh ... maybe 5% on what is left of our position.
Sorry if I got a little verbose there. I just wanted to explain my trading plan a bit more thoroughly than I normally do. Here's to hoping this goes up quite a bit.
Maintaining a Risk/Reward Ratio of 3 to 1, we could place our stop below the $5.29 historical support, specifically $5.17 to risk roughly 22% of our position, and only need to stay in the trade long enough for the price to reach Dow's 50% retrace of roughly $11 to take a profit of 66% (We will sell 50% of our position here). After that, we would raise our stop loss to either our entry level, or if we want to be bolder, raise it to the 22% gain level above our entry point to insure we are playing with the house's money. If it then rose to the .618 golden retrace, we could take profit again for 85% gain by selling 50% of the remainder of our position again. At that point you could set your third take profit level to the end of the golden retrace, the .786, but I figured "Hey, it's take profit 3, why not shoot for the moon a bit?" and set it to the 0.886 for a third take profit of 125%, and we could do so by selling 60% of the remainder of our position. From that point, we could set a Take Profit 4 at one of the Fibonacci Extensions like the 1.172 or the 1.414, while setting a trailing stop of ... oh ... maybe 5% on what is left of our position.
Sorry if I got a little verbose there. I just wanted to explain my trading plan a bit more thoroughly than I normally do. Here's to hoping this goes up quite a bit.
Now, there is a question whether or not this wick just invalidated that hidden bullish divergence. Perhaps it did, but I'm going to stay in it and see how it plays out, unless until there's a close below the stop.